Kohlberg Kravis Roberts & Co. is in advanced talks to buy a majority stake in General Motors Corp.’s GMAC Commerical Mortgage subsidiary for at least $1 billion, The Post has learned.
KKR, the buyout firm led by legendary dealmaker Henry Kravis, has emerged as the top contender to buy more than a 50 percent equity stake in GM’s commercial mortgage unit, which collects payments on mortgages and provides construction loans, tax-exempt securities and equipment financing, sources familiar with the situation said.
As part of the transaction under discussion, KKR is also expected to assist GMAC in refinancing some $3 billion to $4 billion in inter-company debt, sources said.
Although the talks are slowly progressing, there is no guarantee that a deal will be reached, sources warned. There is also a chance that another bidder, such as Blackstone Group or Bain Capital, could step in if the two parties can’t hammer out a deal.
A GM spokeswoman couldn’t be reached last night for comment.
The refinancing and equity investment would significantly increase liquidity for GMAC, and help relieve some pressure on GM’s balance sheet.
Last year, GM put its commercial mortgage operation up for sale in a move that would allow the world’s largest automaker to free up capital to be reinvested in other core businesses.
GM reached an agreement to sell the unit to Deutsche Bank AG, but the sale fell through. In selling a stake in the mortgage unit, GM is attempting to shrink its $300 billion in debt and avoid the risk of a credit downgrade.