Credit Acceptance Announces Completion of $481.8 Million Asset-Backed Financing

Rhea-AI Summary

Credit Acceptance Corporation (Nasdaq: CACC) has successfully completed a $481.8 million asset-backed non-recourse secured financing transaction. This involves contributing approximately $602.3 million in loans to a special purpose entity, which will issue three classes of notes. The financing is structured to revolve for 24 months at an expected annualized cost of around 2.0%. Credit Acceptance will retain 6.0% of the cash flows from the loans for servicing expenses, with the remaining cash allocated to principal and interest payments on the notes.

Positive

• Raised $481.8 million through asset-backed financing.
• Contributed $602.3 million in loans, indicating strong assets.
• Expected annualized cost of financing at approximately 2.0%.
• Retains 6.0% of cash flows for servicing expenses, improving operational stability.

Negative

• None.

Southfield, Michigan, July 23, 2020 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq: CACC) (the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) announced today the completion of a $481.8 million asset-backed non-recourse secured financing (the “Financing”).  Pursuant to this transaction, we contributed loans having a value of approximately $602.3 million to a wholly-owned special purpose entity which will transfer the loans to a trust, which will issue three classes of notes:

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Note Class		Amount		Average Life		Price		Interest Rate
	A		$	326,900,000			2.53 years			99.97761	%		1.37	%
	B		$	94,400,000			3.25 years			99.98068	%		1.93	%
	C		$	60,500,000			3.48 years			99.97903	%		2.73	%

The Financing will:

• have an expected annualized cost of approximately 2.0% 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.

We will receive 6.0% of the cash flows related to the underlying consumer loans to cover servicing expenses.  The remaining 94.0%, 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.

Investor Relations: Douglas W. Busk
Chief Treasury Officer
(248) 353-2700 Ext. 4432
IR@creditacceptance.com

FAQ

What is the recent financing amount completed by Credit Acceptance Corporation?

Credit Acceptance Corporation completed a $481.8 million asset-backed non-recourse secured financing.

What will Credit Acceptance do with the proceeds from the financing?

The proceeds will be used to repay outstanding indebtedness.

What is the expected annual cost of the financing for CACC?

The expected annualized cost of the financing is approximately 2.0%.

How long will the financing revolve before amortizing for CACC?

The financing will revolve for 24 months before amortizing based on cash flows.

What percentage of cash flows will Credit Acceptance retain for servicing expenses?

Credit Acceptance will retain 6.0% of the cash flows related to the underlying consumer loans.