(Reuters) – Bond fund Pacific Investment Management (Pimco) has turned down a debt-exchange offer from GMAC LLC, threatening the auto and mortgage finance company’s bid to qualify for U.S. government funds, the Wall Street Journal reported.
The newspaper quoted a person familiar with the matter.
Pimco, the world’s biggest bond fund and a unit of Allianz SE, had earlier agreed to tender its holdings, the newspaper said.
If Pimco doesn’t participate in the exchange, GMAC — which is 49 percent owned by troubled automaker General Motors Corp — would likely fall short of the capital boost it needs to become a bank holding company.
GMAC and Pimco could not immediately be reached for comment.
GMAC is trying to restructure $38 billion of debt but is short of the 75 percent of approvals needed to become a bank holding company and qualify for funds from the Treasury Department’s $700 billion rescue package.
GMAC has said that without bank holding company status, it would likely have to sell assets and take other extraordinary measures to make good on its obligations.
Private equity firm Cerberus Capital Management LP owns the other 51 percent of Detroit-based GMAC.
(Reporting by Eric Yep in Bangalore; editing by John Stonestreet)