LIVE BLOG OF THE GM-AMERICREDIT CONFERENCE CALL @ 10 AM ET
We will be live-blogging the GM-AmeriCredit conference call regarding the carmaker’s proposed acquisition of the finance company at 10 a.m. ET. We invite AutoFinanceNews.net members to post comments here about the call and live-blog.
Refresh page for live-blog updates.
10:00 AM ET: Call starts on time. GM IR director introduction/disclaimers. Ed Whitacre, Dan Berce Chris Laddel will will offer comments.
Mark Royce and Dan Hammond(sp?) are also on the call.
10:04: Whitacre saying we will “fix” GM’s problem of operating without a captive. GM CEO emphasizes the “move the metal” aspect of the deal. He stresses that GM will continue working with Ally.
“Customers, dealers, and employees” — but not the federal government — expect: that GM moved decisively to acquire ACF.
10:05: Berce is on. He is stressing ACF’s underwriting proficiency. We have also originated prime and near-prime loans, and done leasing, Berce says. He is also stressing ACF’s capital market’s abilities. Berce says the new relationship with GM will expand AmeriCredit’s business, including the adding of leasing. GM loans are now 15% of ACF business — that since the arrangement with GM started last October.
10:09: Liddell, GM’s CFO, offering comments. He says ACF acquisition will expand financing choice for GM customers and will increase GM sales. ACF will also be the “core” of GM’s “captive financing strategy.” Find the presentation here. CFO is stressing that ACF is “scalable.” He says ACF has been strong at managing during “the good times and the bad times.” He says that is a key, because it is important that dealers know that GM will be there for them with solid financing options.
10:13: Capital markets and securitization operations will remain as is at ACF. Ally is an “incredibly important partnership, in our view.” He doesn’t see opportunity to put prime assets on balance sheet. “The acquisition has good economic value.” He says ACF profits will be “shielded” by GM tax losses. (This point was mentioned quickly, so I may not have this point right.)
10:17: Questions start.
JPM Q: Do you have a view on where GM’s penetration in subprime and leasing can get to after this acquisition?
A: We don’t have a view. 4% to 6% are good numbers. Modest in terms of percentages, but a big number. Leasing beyond 7%, but not to 21%. An extra percentage here and there make a big difference from a sales perspective and from an AmeriCredit perspective?
Q: Will non-GM business be hurt from this? Will ACF have guidelines on where they compete?
A: Second question, we think there are tremendous opportunities in the areas ACF is already in. Certainly, opportunities geographically, i.e. in Canada. Non-GM Customers: We are sensitive to it, and we are reaching out to our clients to tell them that.
Q: Issues related to the GM ownership by the government?
A: No. All regulatory issues “will be procedurals.”
Q: AmeriCredit, why now?
A: Can’t answer that. Refers to the proxy statement.
Q: Growth of balance sheet, how will ACF fund that? What kind of capital commitment will be required?
A: This will depend on the securitization market. If securitization goes back to more normal levels, ACF can expand. If the business is going well and needs more capital, that is fine, we will look at that. It is a good problem to have.
Q: What rate of growth?
A: Steady, but not exponential growth.
Q: Barclays Capital: How are you looking at the all-in funding costs? Ford is still funding in the unsecured market? Would you do that?
A: No, ACF has a strong track record in the securitization market, so we don’t see changing the funding model at all. We don’t see any need to change that.
Q: What do you expect will be the impact on ACF’s credit rating?
A: We are currently rate at low single B.
Q: Do you have to get the rating up to grow the balance sheet?
A: We are talking about a $9 billion balance sheet. Ford’s balance sheet is $100 billion. We are talking about a much more manageable balance sheet.
Q: The increased subvention cost? How will that effect profitability?
A: Won’t change subvention. Will remain constant.
Q: Ally?
A: They are a very important partner. It is important that they are successful, it is important that they are strong.
Q: Is this going to funded with cash?
A: Yes.
Q: Timing of the deal? Why bring ACF in house?
A: On a commercial level, they have been running programs for us for a couple of years. Started talking to them about a month ago. It was relatively quickly, but it came together very quickly because we know them very well. It is part of the culture at GM now.
10:30: Call concludes. We had a bunch of questions we wanted to ask, but weren’t allowed. Only three media questions were fielded. Specifically, we wonder how ACF is going to bone up its leasing business essentially from de novo. We also wonder just how far up the credit spectrum ACF will go, considering its last foray above nonprime — with the acquisition of Bay View Acceptance Corp. in 2005 — didn’t end well.
Please login to join discussion
