Credit Acceptance Announces Increase and Extension of Revolving Secured Warehouse Facility

Rhea-AI Summary

Credit Acceptance (Nasdaq: CACC) has announced significant changes to its Warehouse Facility V. The facility's amount has been increased from $200.0 million to $250.0 million. The revolving period has been extended from December 29, 2025 to December 29, 2027, and the maturity date has been pushed from December 27, 2027 to December 27, 2029. Additionally, the interest rate on borrowings has been reduced from SOFR plus 245 basis points to SOFR plus 185 basis points. As of December 5, 2024, there was no outstanding balance under the facility.

Positive

• Increased warehouse facility capacity by $50 million to $250 million
• Reduced borrowing costs with interest rate decrease of 60 basis points
• Extended facility revolving period by 2 years to 2027
• Extended facility maturity by 2 years to 2029

Negative

• None.

Insights

Financial Analyst

The expanded $250M warehouse facility represents a significant improvement in Credit Acceptance's liquidity position, with more favorable terms across multiple dimensions. The 60 basis point reduction in the interest rate spread (from SOFR+245 to SOFR+185) will meaningfully lower borrowing costs. The two-year extension of both the revolving period and maturity provides enhanced financial flexibility through 2029. While the facility is currently unused, the increased capacity and improved terms strengthen CACC's funding structure and ability to support loan originations. This facility enhancement aligns with industry trends of lenders securing longer-term, lower-cost funding in the current market environment. The terms suggest strong lender confidence in CACC's credit quality and business model.

Credit Market Specialist

This facility modification demonstrates CACC's strong market position in securing favorable financing terms despite a challenging credit environment. The 25 increase in facility size to $250M and significant spread compression indicates robust institutional appetite for CACC's credit risk. The extended revolving period through 2027 and maturity to 2029 provides important duration matching for their auto loan portfolio. The unused status of the facility suggests this is preemptive balance sheet optimization rather than immediate funding needs, highlighting prudent liquidity management. These improved terms should positively impact CACC's net interest margin and profitability metrics going forward.

Southfield, Michigan, Dec. 05, 2024 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq: CACC) (referred to as the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) announced today that we have increased the amount of Warehouse Facility V (the “Facility”), one of our revolving secured warehouse facilities, from $200.0 million to $250.0 million. We also extended the date on which the Facility will cease to revolve from December 29, 2025 to December 29, 2027. The maturity of the Facility was also extended from December 27, 2027 to December 27, 2029. The interest rate on borrowings under the Facility has decreased from the Secured Overnight Financing Rate (“SOFR”) plus 245 basis points to SOFR plus 185 basis points.

There were no other material changes to the Facility. As of December 5, 2024, we did not have a balance outstanding under the Facility.

Description of Credit Acceptance Corporation

We make vehicle ownership possible by providing innovative financing solutions 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 changes did Credit Acceptance (CACC) make to its Warehouse Facility V in December 2024?

Credit Acceptance increased the facility from $200M to $250M, extended the revolving period to December 2027, extended maturity to December 2029, and reduced the interest rate from SOFR+245bps to SOFR+185bps.

What is the new interest rate for Credit Acceptance's (CACC) Warehouse Facility V?

The new interest rate is SOFR plus 185 basis points, reduced from the previous rate of SOFR plus 245 basis points.

When is the new maturity date for Credit Acceptance's (CACC) Warehouse Facility V?

The new maturity date is December 27, 2029, extended from the previous date of December 27, 2027.