Credit Acceptance Announces Completion of $250.1 Million Asset-Backed Financing

Rhea-AI Summary

Credit Acceptance Corporation (Nasdaq: CACC) announced the completion of a $250.1 million asset-backed non-recourse secured financing, contributing loans valued at approximately $312.6 million to a special purpose entity. The financing involves three note classes with varying amounts: Class A - $175.84 million, Class B - $26.34 million, and Class C - $47.87 million. The annualized cost is expected to be around 1.8%. The financing aims to repay existing debts and serve general corporate purposes.

Positive

• Completion of $250.1 million asset-backed financed transaction.
• Contribution of loans valued at $312.6 million.
• Expected annualized cost of financing at 1.8%, beneficial for managing debt.

Negative

• None.

Southfield, Michigan , Oct. 28, 2021 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq: CACC) (the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) announced today the completion of a $250.1 million asset-backed non-recourse secured financing (the “Financing”).  Pursuant to this transaction, we contributed loans having a value of approximately $312.6 million to a wholly-owned special purpose entity which will transfer the loans to a trust, which will issue three classes of notes:

Note Class			Amount			Average Life			Price			Interest Rate
	A		$	175,840,000			2.54 years			99.98591	%		1.26	%
	B		$	26,337,000			3.21 years			99.97627	%		1.74	%
	C		$	47,873,000			3.43 years			99.99298	%		1.94	%

The Financing will:

• have an expected annualized cost of approximately 1.8% including the initial purchasers’ fees and other costs;
• revolve for 24 months after which it will amortize based upon the cash flows on the contributed loans; and
• be used by us to repay outstanding indebtedness and for general corporate purposes.

We will receive 4.0% of the cash flows related to the underlying consumer loans to cover servicing expenses.  The remaining 96.0%, less amounts due to dealers for payments of dealer holdback, will be used to pay principal and interest on the notes as well as the ongoing costs of the Financing.  The Financing is structured so as not to affect our contractual relationships with our dealers and to preserve the dealers’ rights to future payments of dealer holdback.

The notes have not been and will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.  This news release does not and will not constitute an offer to sell or the solicitation of an offer to buy the notes.  This news release is being issued pursuant to and in accordance with Rule 135c under the Securities Act of 1933.

Description of Credit Acceptance Corporation

Since 1972, Credit Acceptance has offered financing programs that enable automobile dealers to sell vehicles to consumers, regardless of their credit history.  Our financing programs are offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing; from repeat and referral sales generated by these same customers; and from sales to customers responding to advertisements for our financing programs, but who actually end up qualifying for traditional financing.

Without our financing programs, consumers are often unable to purchase vehicles or they purchase unreliable ones.  Further, as we report to the three national credit reporting agencies, an important ancillary benefit of our programs is that we provide consumers with an opportunity to improve their lives by improving their credit score and move on to more traditional sources of financing.  Credit Acceptance is publicly traded on the Nasdaq stock market under the symbol CACC.  For more information, visit creditacceptance.com.

FAQ

What was Credit Acceptance's recent financing announcement on October 28, 2021?

Credit Acceptance announced a $250.1 million asset-backed non-recourse secured financing involving loans valued at approximately $312.6 million.

What are the key details of the notes issued in the financing?

The financing includes three classes of notes: Class A ($175.84 million), Class B ($26.34 million), and Class C ($47.87 million), with varying interest rates.

What is the expected cost of the financing for Credit Acceptance?

The expected annualized cost of the financing is approximately 1.8%, including initial purchaser fees and other costs.

What will the financing be used for?

The financing will be used primarily to repay outstanding indebtedness and for general corporate purposes.

How does the financing affect Credit Acceptance's dealer relationships?

The financing is structured to not affect contractual relationships with dealers and preserve their rights to future payments.