GENERAL MOTORS CORP: Re Agreement

GM Reaches Agreement to Sell Controlling Stake in GMAC

         Cerberus Led Consortium To Buy 51 Percent Of GMAC Equity

         GM To Receive $14 Billion In Cash Over Three-Year Period

    DETROIT, April 3 -- General Motors Corp. (NYSE: GM) today announced it has 
entered into a definitive agreement to sell a 51-percent controlling interest 
in General Motors Acceptance Corp. (GMAC) to a consortium of investors led by 
Cerberus Capital Management, L.P., a private investment firm, and including 
Citigroup Inc., and Aozora Bank Ltd.  GM expects to receive approximately $14 
billion in cash from this transaction over three years, including 
distributions from GMAC, with an estimated $10 billion by closing.
    The transaction strengthens GMAC's ability to support GM's automotive 
operations, improves GMAC's access to cost-effective funding, provides 
significant liquidity to GM and allows GM to continue to participate in the 
profitability of GMAC over the long term through its 49-percent ownership 
stake. 
    "We look forward to working with Cerberus to maintain and grow GMAC's 
traditional strong performance and contribution to the GM family," said GM 
Chairman and Chief Executive Officer Rick Wagoner.  "This agreement is another 
important milestone in the turnaround of General Motors.  It creates a 
stronger GMAC while preserving the mutually beneficial relationship between GM 
and GMAC.  At the same time, it provides significant liquidity to support our 
North American turnaround plan, finance future GM growth initiatives, 
strengthen our balance sheet and fund other corporate priorities.
    "Over the last nine months we have been aggressively implementing our 
North American turnaround plan," Wagoner said.  "We've made some big moves, 
such as the health-care agreement with the United Auto Workers union; the 
manufacturing capacity plan; changes to our salaried health-care and pension 
plans; an accelerated attrition plan for hourly employees; and a complete 
overhaul of our marketing strategy.  These bold initiatives are designed to 
immediately improve our competitiveness and position GM for long-term success 
and today's transition is a further step in that direction." 
    The GM Board of Directors approved the sale in a special meeting on Sunday 
which followed extensive consideration of this transaction and alternative 
strategies over the past several months.  Speaking for the GM Board, Presiding 
Director George Fisher stated, "This transaction along with the other progress 
GM has been making on its turnaround plan, is an important milestone.  While 
there is still much work to be done, the GM Board has great confidence in Rick 
Wagoner, his management team and the plan they are implementing to restore the 
company to profitability."
    The transaction is subject to a number of U.S. and international 
regulatory and other approvals.  The companies expect to close the transaction 
in the fourth quarter of 2006.

                           Long-Term Relationship

    "We are very proud to align ourselves with an American icon like GM 
through GMAC, one of the most recognized and respected names in the financial 
services industry," said Mark Neporent, Cerberus' chief operating officer and 
senior managing director.  "We are committed to a long-term partnership that 
we expect will bring sustained growth, diversity of product offerings and 
lasting benefits to GM and GMAC employees, dealers, suppliers, customers and 
other stakeholders."
    "We are committed to helping GMAC compete even more effectively and 
continuing its tradition of strong growth and success," added Lenard Tessler, 
Cerberus' head of Private Equity and senior managing director.  "We recognize 
that GM's dealers are a cornerstone for growth in this business, and we are 
committed to maintaining the strong support that GMAC provides to its dealer 
customers.  Moreover, we have great confidence and respect for the people of 
GMAC, and look forward to the continued success of the GMAC automotive 
financing, mortgage and insurance, banking, and real estate services 
businesses around the globe."
    GMAC Chairman and Chief Executive Officer Eric Feldstein, who will 
continue to lead the company after the equity sale, said, "This transaction 
begins an exciting new chapter for GMAC that will allow us to realize our 
strategic vision of becoming a premier global financial services company.  
With improved access to cost-effective funding, we will be able to provide 
more competitive financing to promote GM vehicle sales and to re-establish our 
historic trend of profitable growth across all our business sectors.  GMAC is 
now poised to move from a defensive game plan to playing offense again, which 
should enable us to deliver tremendous value to our shareholders."
    As part of the transaction, GM and GMAC will enter into a number of 
10-year agreements under which GMAC will continue to support GM's automotive 
operations and provide GM and its dealers and customers with the same broad 
range of financial products and services it does today.  Customers and dealers 
should continue to expect the world-class service that GMAC currently 
provides, and GMAC will continue to be the preferred and exclusive provider of 
various financial products involving GM-sponsored consumer and wholesale 
marketing incentives around the world.  Additionally, employment levels are 
not expected to change as a result of this transaction.  Under the agreements, 
GM will have an option to acquire GMAC's global automotive finance operations, 
under certain conditions, including an investment-grade rating at GM.  This 
option is exercisable for 10 years after the closing of the transaction.

                       GM to Receive $14 Billion in Cash

    The $14 billion in cash that GM is to receive as part of the transaction 
includes $7.4 billion from the Cerberus-led consortium at closing and an 
estimated $2.7 billion cash distribution from GMAC related to the conversion 
of most of GMAC and its U.S. subsidiaries to limited liability companies.  In 
addition, GM will retain about $20 billion of GMAC automotive lease and retail 
assets and associated funding with an estimated net book value of $4 billion 
that will monetize over three years.
    GM also will receive dividends from GMAC equivalent to its earnings prior 
to closing, which largely will be used to fund the repayment of various 
intercompany loans from GMAC.  As a result of these reductions, GMAC's 
unsecured exposure to GM is expected to be reduced to approximately $400 
million and will be capped at $1.5 billion on an ongoing basis.
    GM and the consortium will invest $1.9 billion of cash in new GMAC 
preferred equity -- $1.4 billion to be issued to GM and $500 million to the 
Cerberus consortium.  GM also will continue to receive its 49 percent share of 
common dividends and other value generated by GMAC.
    GM will take a non-cash pre-tax charge to earnings of approximately $1.1 
billion to $1.3 billion in the second quarter of 2006 associated with the sale 
of 51 percent of GMAC.

          Citigroup Providing $25 Billion Syndicated Funding Facility

    Citigroup will arrange two syndicated asset-based funding facilities that 
total $25 billion which will support GMAC's ongoing business and enhance 
GMAC's already strong liquidity position.  Citigroup has committed $12.5 
billion in the aggregate to these two facilities.  The funding facilities are 
in addition to Citigroup's initial equity investment in GMAC. 
    "Citigroup has a 90-year relationship with GM and this transaction 
represents both an opportunity to demonstrate our ongoing commitment to its 
long-term success as well as an attractive investment opportunity.  We are 
pleased to be part of this unique and strong partnership, led by Cerberus," 
said Michael Klein, chief executive officer of the Global Banking Unit of 
Citigroup Corporate and Investment Banking.
    The GMAC board of directors will have 13 members -- six appointed by the 
consortium; four appointed by GM; and three independent members.  GMAC will 
continue to be managed by its existing executive management.
    GM expects that the introduction of a new controlling investor for GMAC, 
new equity capital at GMAC, and significantly reduced inter-company exposures 
to GM will provide GMAC with a solid foundation to improve its current credit 
rating.  GM and GMAC expect that these actions will de-link the GMAC credit 
ratings from those of GM.

    About GM
    General Motors Corp. (NYSE: GM), the world's largest automaker, has been 
the global industry sales leader for 75 years.  Founded in 1908, GM today 
employs about 327,000 people around the world.  With global headquarters in 
Detroit, GM manufactures its cars and trucks in 33 countries.  In 2005, 9.17 
million GM cars and trucks were sold globally under the following brands: 
Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, 
Saab, Saturn and Vauxhall.  More information on GM can be found at 
http://www.gm.com .

    About Cerberus
    Established in 1992, Cerberus Capital Management, L.P. is one of the 
world's leading private investment firms with $18 billion in assets under 
management for individual and institutional investors, including state and 
corporate pension funds, insurance companies, foundations and endowments.  
Through its team of more than 275 investment and operations professionals, 
Cerberus specializes in providing both financial resources and operational 
expertise to help transform undervalued companies into industry leaders for 
long-term success and value creation.  Cerberus is headquartered in New York 
City, with offices in Chicago, Los Angeles, Atlanta, Amsterdam, Frankfurt, 
Tokyo, Osaka and Taipei.  More information on Cerberus can be found at 
http://www.cerberuscapital.com .

    About GMAC
    General Motors Acceptance Corporation and its subsidiaries, operating 
under the umbrella GMAC Financial Services, provide automotive financing, 
commercial finance, insurance and mortgage products, banking, and real estate 
services, and have a presence in more than 40 nations.  GMAC has extended more 
than $1.4 trillion in credit to finance more than 162 million vehicles. 

    About Citigroup 
    Citigroup, the leading global financial services company, has some 200 
million customer accounts and does business in more than 100 countries, 
providing consumers, corporations, governments and institutions with a broad 
range of financial products and services, including consumer banking and 
credit, corporate and investment banking, securities brokerage, and wealth 
management.  Major brand names under Citigroup's trademark red umbrella 
include Citibank, CitiFinancial, Primerica, Smith Barney and Banamex. 
Additional information may be found at http://www.citigroup.com .

    About Aozora Bank
    Aozora Bank Limited is a leading provider of lending, securitization, 
business and asset revitalization, asset management, loan syndication and 
investment advisory services and products to financial institution, and 
corporate and retail customers.  Originally established in 1957 as the Nippon 
Fudosan Bank, Ltd., the bank changed its name in 2001.  In 2003, it became 
majority owned by Cerberus NCB Acquisition, LP. 

    Forward-Looking Statements
    In this report and in related comments by management of GM, our use of the 
words "expect," "anticipate," "estimate," "forecast," "initiative," 
"objective," "plan," "goal," "project," "outlook," "priorities," "target," 
"intend," "evaluate," "pursue," "seek," "may," "would," "could," "should," 
"believe," "potential," "continue," "designed," "impact," or the negative of 
any of those words or similar expressions is intended to identify forward-
looking statements.  While these statements represent our current judgment on 
what the future may hold, and we believe these judgments are reasonable when 
made, these statements are not guarantees of any events or financial results, 
and GM's actual results may differ materially due to numerous important 
factors that may be revised or supplemented in subsequent reports on SEC Forms 
10-Q and 8-K.  Such factors include, among others, the following:
    --  The ability of GM to realize production efficiencies, to achieve 
reductions in costs as a result of the turnaround restructuring and health 
care cost reductions and to implement capital expenditures at levels and times 
planned by management;
    --  Receipt of regulatory approvals needed to complete the Acquisition;
    --  The pace of product introductions;
    --  Market acceptance of GM's new products;
    --  Significant changes in the competitive environment and the effect of 
competition in the Corporation's markets, including on GM's pricing policies;
    --  Our ability to maintain adequate liquidity and financing sources and 
an appropriate level of debt;
    --  Restrictions on GMAC's and ResCap's ability to pay dividends and 
prepay subordinated debt obligations to us;
    --  Changes in the existing, or the adoption of new, laws, regulations, 
policies or other activities of governments, agencies and similar 
organizations where such actions may affect the production, licensing, 
distribution or sale of our products, the cost thereof or applicable tax 
rates;
    --  Costs and risks associated with litigation;
    --  The final results of investigations and inquiries by the SEC;
    --  Changes in our accounting principles, or their application or 
interpretation, and our ability to make estimates and the assumptions 
underlying the estimates, including the range of estimates for the Delphi 
pension benefit guarantees, which could result in an impact on earnings;
    --  Changes in relations with unions and employees/retirees and the legal 
interpretations of the agreements with those unions with regard to 
employees/retirees;
    --  Negotiations and bankruptcy court actions with respect to Delphi's 
obligations to GM, negotiations with respect to GM's obligations under the 
pension benefit guarantees to Delphi employees, and GM's ability to recover 
any indemnity claims against Delphi;
    --  Labor strikes or work stoppages at GM or its key suppliers such as 
Delphi or financial difficulties at GM's key suppliers such as Delphi;
    --  Additional credit rating downgrades and the effects thereof;
    --  The effect of a potential sale or other extraordinary transaction 
involving GMAC on the results of GM's and GMAC's operations and liquidity;
    --  Other factors affecting financing and insurance operating segments' 
results of operations and financial condition such as credit ratings, adequate 
access to the market, changes in the residual value of off-lease vehicles, 
changes in U.S. government-sponsored mortgage programs or disruptions in the 
markets in which our mortgage subsidiaries operate, and changes in our 
contractual servicing rights;
    --  Shortages of and price increases for fuel; and
    --  Changes in economic conditions, commodity prices, currency exchange 
rates or political stability in the markets in which we operate.

    In addition, GMAC's actual results may differ materially due to numerous 
important factors that are described in GMAC's most recent report on SEC Form 
10-K, which may be revised or supplemented in subsequent reports on SEC Forms  
10-Q and 8-K.  Such factors include, among others, the following: 
    --  The ability of GM to complete a transaction regarding a controlling 
interest in GMAC while maintaining a significant stake in GMAC, securing 
separate credit ratings and low cost funding to sustain growth for GMAC and 
ResCap, and maintaining the mutually beneficial relationship between GMAC and 
GM;
    --  Significant changes in the competitive environment and the effect of 
competition in the Corporation's markets, including on the Corporation's 
pricing policies;
    --  Our ability to maintain adequate financing sources;
    --  Our ability to maintain an appropriate level of debt;
    --  The profitability and financial condition of GM, including changes in 
production or sales of GM vehicles, risks based on GM's contingent benefit 
guarantees and the possibility of labor strikes or work stoppages at GM or at 
key suppliers such as Delphi;
    --  Funding obligations under GM and its subsidiaries' qualified U.S. 
defined benefits pension plans;
    --  Restrictions on ResCap's ability to pay dividends and prepay 
subordinated debt obligations to us;
    --  Changes in the residual value of off-lease vehicles;
    --  Changes in U.S. government-sponsored mortgage programs or disruptions 
in the markets in which our mortgage subsidiaries operate;
    --  Changes in our contractual servicing rights;
    --  Costs and risks associated with litigation;
    --  Changes in our accounting assumptions that may require or that result 
from changes in the accounting rules or their application, which could result 
in an impact on earnings;
    --  Changes in the credit ratings of GMAC or GM;
    --  The threat of natural calamities;
    --  Changes in economic conditions, currency exchange rates or political 
stability in the markets in which we operate; and
    --  Changes in the existing, or the adoption of new, laws, regulations, 
policies or other activities of governments, agencies and similar 
organizations.

    Investors are cautioned not to place undue reliance on forward-looking 
statements.  GM undertakes no obligation to update publicly or otherwise 
revise any forward-looking statements, whether as a result of new information, 
future events or other such factors that affect the subject of these 
statements, except where expressly required by law.

SOURCE  General Motors Corporation
    -0-                             04/03/2006 P
    /NOTE TO EDITORS:  For additional media information visit http://media.gm.com ./
    /CONTACT:  Toni Simonetti of General Motors, [phone], or mobile, 
[phone], [e-mail] , Jerry Dubrowski of General Motors, 
[phone], or mobile, [phone], [e-mail] ; Joanne 
Krell of GMAC Financial Services, [phone], or mobile, [phone],
[e-mail] ; For Cerberus: Peter Duda of Weber Shandwick, 
[phone], [e-mail] , J.J. Rissi of Weber Shandwick, 
[phone], [e-mail] /
    /Web site:  http://media.gm.com 
                http://www.gm.com 
              http://www.cerberuscapital.com /
    (GM)


 
 
 
 



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