Credit Acceptance Announces Completion of $350.0 Million Asset-Backed Financing and Extension of $300.0 Million Revolving Secured Warehouse Facility

Rhea-AI Summary

Credit Acceptance Corporation (Nasdaq: CACC) announced the completion of a $350 million asset-backed financing secured by approximately $437.6 million in loans. The financing, with an expected annualized cost of about 5.4%, is set to revolve for 24 months before amortizing. The funds will be used for repaying outstanding debt and general corporate purposes. Additionally, the company extended the revolving secured warehouse facility's maturity from November 2023 to May 2025, with no outstanding balance as of June 16, 2022.

Positive

• Completion of $350 million financing, enhancing liquidity.
• Expected annualized cost of financing at 5.4%, indicating reasonable costs.
• Extension of revolving secured warehouse facility maturity to May 2025, providing financial flexibility.

Negative

• None.

Southfield, Michigan, June 16, 2022 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq: CACC) (the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) announced today the completion of a $350.0 million asset-backed non-recourse secured financing (the “Financing”). Pursuant to this transaction, we contributed loans having a value of approximately $437.6 million to a wholly-owned special purpose entity which will transfer the loans to a trust, which will issue four classes of notes:

Note Class			Amount			Average Life			Price			Interest Rate
	A		$	184,850,000			2.51 years			99.97752	%		4.60	%
	B		$	65,310,000			3.19 years			99.99521	%		4.95	%
	C		$	78,950,000			3.64 years			99.99721	%		5.70	%
	D		$	20,890,000			3.83 years			99.99104	%		6.63	%

The Financing will:

• have an expected annualized cost of approximately 5.4% 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.

Additionally, we announced today that we extended the date on which our $300.0 million revolving secured warehouse facility will cease to revolve from November 17, 2023 to May 20, 2025.  There were no other material changes to the terms of the facility.

As of June 16, 2022, we did not have a balance outstanding under the revolving secured warehouse facility.

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 is the significance of Credit Acceptance's $350 million financing?

The $350 million financing will enhance liquidity and be used for debt repayment and general corporate purposes.

How will the financing affect shareholders of CACC?

The financing is expected to improve the company's liquidity without impacting shareholder rights directly.

What is the new maturity date for Credit Acceptance's warehouse facility?

The maturity date for the revolving secured warehouse facility has been extended to May 20, 2025.

What are the terms of the new financing for CACC?

The financing has an expected annualized cost of approximately 5.4% and will revolve for 24 months.