May 22 (Bloomberg) -- Residential Capital LLC, the distressed mortgage-finance company, won support from most bondholders for a debt restructuring plan needed to stave off bankruptcy.

Investors tendered about $9.5 billion of notes as part of an offer to exchange or buy back $14 billion of debt for as little as 80 cents on the dollar, GMAC LLC, ResCap's parent company, said yesterday in a statement on its Web site.

The tenders may be a temporary reprieve for ResCap, which said this month it may not be able to meet its June debt obligations. After six quarterly losses totaling $5.3 billion, Minneapolis-based ResCap is close to violating loan covenants and may still need $600 million to avoid default, even with a successful exchange offer and financing from GMAC's parents, General Motors Corp. and Cerberus Capital Management LP. The tender will reduce debt and delay maturities until 2010 and 2015.

``It's going in the right direction,'' said Ming Shao, director of fixed-income investments at DuPont Capital Management Corp. in Wilmington, Delaware. The tender going through is ``better for bondholders as a whole'' if it forestalls a bankruptcy filing, he said.

Investors tendered about $2.6 billion of debt slated to mature in 2008 and 2009, or about 80 percent of the amount outstanding, ResCap said yesterday. Holders of $6 billion of bonds maturing in 2010 through 2015 exchanged their securities and about $853 million of its floating-rate notes due in June were tendered for cash.

Based on the tenders so far, about $5.7 billion of new notes would be issued to replace old ones, ResCap said.

`The Carrot'

Some bondholders had initially sought to build opposition to the plan, which offered investors as little as 80 cents on the dollar for their bonds, though no organized protest emerged. The bankruptcy threat left bondholders with little choice but to tender, according to a report last week by high-yield research firm KDP Investment Advisors.

Shao said he tendered ResCap bonds maturing in 2009 because the new bonds will be senior to the old securities and are secured. DuPont manages $5.5 billion in fixed-income assets.

``They provided you with a little better collateral with a little better protection. That's the carrot,'' Shao said. ``Depending on your entry point, you had upside. We did OK.''

The early deadline for the tender expired at 5 p.m. yesterday after being extended from May 16. Bondholders who tender between now and June 3, the close of the offer, will get as little as 77 cents on the dollar in the swap.

Cerberus Purchase

The exchange is contingent on ResCap getting a new $3.5 billion credit line from GMAC. Detroit-based GM and New York- based Cerberus may guarantee the first $750 million of the borrowings.

Cerberus led a group that paid $7.4 billion for 51 percent of GMAC in 2006 as part of what has become a $15 billion bet on selling cars and providing loans to the buyers. The company also bought Chrysler LLC and its financing unit.

Separated from GM, GMAC's credit rating was supposed to rise from junk, which would have lowered borrowing costs. Instead, mounting losses at ResCap have led New York-based Moody's Investors Service to cut GMAC's debt rating four times as the economy endured the worst housing slump since the Great Depression. GMAC injected more than $2 billion of capital into ResCap, the eighth-largest U.S. residential lender in 2007, after the unit was stung by falling home prices and record foreclosures.

Cerberus founder Stephen Feinberg now may need to decide whether to inject more money into ResCap or let it die.

Credit-Default Swaps

Credit-default swaps tied to ResCap's bonds have been trading at levels that suggest investors see almost-certain odds the company will default in the next five years.

Sellers of the contracts, which pay a buyer face value or the cash equivalent should the company fail to meet its debt obligations, demanded 49.5 percent upfront and 5 percent a year, according to London-based CMA Datavision. That's up from an initial payment of 48 percent and 5 percent a year yesterday.

The price implies a 97 percent chance of default within five years, based on an assumption that bondholders would recover 40 percent of their investments, according to a JPMorgan Chase & Co. valuation model.

Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.

To contact the reporter on this story: Caroline Salas in New York at csalas1@bloomberg.net; Shannon D. Harrington in New York at sharrington6@bloomberg.net

Last Updated: May 22, 2008 10:50 EDT