GMAC Commercial Finance, the lender that helped to pull the plug on Woolworths when it collapsed last year, is quitting the British market as GMAC Financial Services, its parent company, looks to sell off its lending book.
The unit that lends to companies such as Jaeger, the women's fashion chain, and glass-maker Pilkington, has been put up for sale in recent weeks as returns from the sector have declined. A £235m book of assets lent to about 200 clients is being sold off and could fetch as much as £300m, sources familiar with the sale process have said.
It's thought that some more troublesome loans have been retained to stoke up interest and speed up the sale.
GMAC Commercial Finance hit the headlines when, along with Burdale, the asset-based lending arm of Bank of Ireland, it lent £350m to Woolworths, in January 2008. The loan was secured against various of the retailer's assets, including its shares, and it's thought that both Burdale and GMAC managed to recoup nearly all of their cash despite the company's failure.
Besides Woolies, GMAC provides a lending facility to Jaeger worth nearly £16m. In the past, the group lent £75m to the Focus DIY chain, which has since undergone a Company Voluntary Arrangement (CVA). It has also lent money to fine china-maker Hudson & Middleton and Baumler, a German men's fashion chain,.
The group's exit from the UK market comes on the back of the withdrawal of others in the asset-based lending arena including Landsbanki, the troubled Icelandic lender.
Steven Chait, the head of new business at Burdale, said recently: "In January 2008 we jointly underwrote a £350m deal for Woolworths with GMAC. That would be impossible today. The most we would do on our own is £50m."
However, others have entered the market including the likes of HSBC, which is likely to be interested in scooping GMAC Commercial Finance UK's assets.
Ian Watson, the international managing director for GMAC Commercial Finance, declined to comment.Reuse content