SOUTHFIELD, Mich., May 27, 2008 (PRIME NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq:CACC) (the "Company") announced today the completion of a $50 million asset-backed non-recourse secured financing with an institutional investor.
Under this facility, the Company will contribute loans to a wholly owned special purpose entity and receive 80% of the net book value of the loans. The Company may borrow up to the lesser of 80% of the contributed loans or $50 million during the first two years of the financing after which the financing will amortize over one year. The Company initially contributed loans having a net book value of $62.5 million and borrowed $50 million. The proceeds of the financing will be used by the Company to repay outstanding indebtedness.
Borrowings under the facility will bear interest at a floating rate equal to the commercial paper rate plus 77.5 basis points with the commercial paper rate limited to a maximum of 6.75% by an interest rate cap agreement.
The Company will receive a servicing fee of 6.0% of the cash flows related to the underlying consumer loans. The remaining 94.0%, less amounts due to dealer-partners 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. Using a unique financing structure, the Company's contracted relationship with its dealer-partners remains unaffected with the dealer-partners' rights to future payments of dealer holdback preserved.
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 provided auto loans to consumers, regardless of their credit history. Our product is 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 product, but who actually end up qualifying for traditional financing.
Without our product, consumers may be unable to purchase a vehicle or they may purchase an unreliable one, or they may not have the opportunity to improve their credit standing. As we report to the three national credit reporting agencies, a significant number of our customers 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 under the symbol CACC. For more information, visit creditacceptance.com.