GMAC LLC said Monday that it has sweetened the terms of a debt-exchange offer that it has called crucial to getting approval to become a bank holding company.

The Federal Reserve Board has told the finance company it must raise its regulatory capital to $30 billion, from about $9 billion on Sept. 30, for its application for a bank holding conversion to be approved. GMAC has tried to boost its capital by repurchasing about $38 billion of its debt.

It has been offering bondholders 55 to 85 cents on the dollar in cash, or a combination of new bonds and preferred shares. It needs 75% of the bondholders to take the offer to achieve its capital goal, but only about a quarter of its bondholders have done so.

On Monday GMAC said it had increased the dividend of the preferred shares on offer to 9%, from 5%, and added covenants to the proposed new bonds to protect holders.

GMAC also said it now plans to raise $2 billion of additional Tier 1 capital, including $750 million from its two shareholders, Cerberus Capital Management LP and General Motors Corp. Once the capital is raised, the dividend on the preferred shares would drop to 7%.

The new terms reflect "an agreement in principle" that GMAC has reached with "representatives of a substantial portion of the outstanding notes," the company said. The revised offer expires at midnight on Dec. 26.

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