ResCap Hunts For Liquidity; Sells Heathcare Finance Unit for $775 Million

In a bid to build additional liquidity, SEC filings show that Residential Capital LLC received $775 million late last week for the sale of its healthcare-related assets — a move that hints at the recent troubles faced by its mortgage operations.

From the SEC filing:

On Aug. 27, 2007, Residential Funding Company, LLC and Equity Investments II, LLC, each wholly owned subsidiaries of Residential Capital, LLC, sold substantially all of the assets and operations comprising their healthcare finance business to GMAC Commercial Finance LLC, a wholly owned subsidiary of GMAC LLC, pursuant to an asset purchase agreement.

The healthcare finance business was historically reported within ResCap’s Business Capital Group segment in its financial statements and reports filed with the Securities and Exchange Commission.

ResCap received $775 million, representing approximately 90 percent of book value on the closing date of the assets transferred.

The final valuation of the sale may go up, depending on an independent assessment of the fair value of the sold business. ResCap said in its filing that the price will not, however, go down below the original sale amount. Either way, the sale likely delivers some much-needed liquidity to ResCap’s mortgage operations.

ResCap — the corporate parent of GMAC Mortgage, GMAC-RFC and Homecomings Financial — recently saw its debt ratings slashed to junk status by Fitch Ratings due to what the agency cited as “weak operating performance.”