Key Developments For Credit Acceptance Corporation
Credit Acceptance Corporation (CACC.O) (Consolidated Issue listed on NASDAQ Global Market)
Credit Acceptance Corporation Announces Extension And Modification Of Credit Agreement
Credit Acceptance Corporation announced that it has extended the maturity of its credit facility with a commercial bank syndicate from June 22, 2010 to June 23, 2011. The amount of the facility was reduced from $153.5 million to $140.0 million. The interest rate on borrowings under the facility has been increased from the prime rate minus 0.60% or 1.25% over the Eurodollar rate, at the Company's option to the prime rate plus 1.0% or 2.75% over the Eurodollar rate, at the Company's option. The Eurodollar rate is subject to a floor of 1.50%. In addition, certain financial covenants were modified as follows: The maximum Funded Debt to Tangible Net Worth ratio was reduced from 4.0 to 1.0 to a ratio of 3.25 to 1.0. The minimum Fixed Charge Coverage ratio was increased from 1.75 to 1.0 to a ratio of 2.0 to 1.0. The minimum Asset Coverage Ratio was increased from 1.0 to 1.0 to a ratio of 1.1 to 1.0.
Credit Acceptance Corporation Announces Extension Of $325.0 Million Warehouse And $50.0 Million Residual Credit Facilities
Credit Acceptance Corporation announced that it has extended the maturity date of its $325.0 million revolving warehouse facility from February 11, 2009 to August 26, 2009, and extended the maturity date of its $50.0 million residual credit facility from September 9, 2008 to August 26, 2009. The interest rate on borrowings under the $325.0 million warehouse facility has been increased from a floating rate equal to the commercial paper rate plus 65 basis points to the commercial paper rate plus 100 basis points. The interest rate on borrowings under the $50.0 million residual credit facility has been increased from a floating rate equal to the commercial paper rate plus 145 basis points to the commercial paper rate plus 250 basis points. There were no other material changes to the terms of either facility.
Credit Acceptance Corporation Announces Completion Of $50 Million Asset-Backed Financing
Credit Acceptance Corporation announced 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.
Credit Acceptance Corporation Announces Completion of $150 Million Asset-Backed Financing
Credit Acceptance Corporation announced that it has completed $150 million asset-backed non-recourse secured financing. Pursuant to this transaction, the Company will contribute loans to a wholly owned special purpose entity which will transfer the loans to a Trust, which will issue notes to a qualified institutional investor. The Company may borrow up to the lesser of 80% of the contributed loans or $150 million during the first twelve months of the financing after which the financing will amortize based upon the cash flows on the contributed loans. The Company initially contributed loans having a net book value of $86.5 million and borrowed $69.0 million. The proceeds of the financing will be used by the Company to repay outstanding indebtedness. The initial borrowing of $69.0 million will bear interest at an effective fixed rate of 6.3% and have an expected annualized cost of approximately 6.9% including underwriter's fees and other costs.
Credit Acceptance Corporation Announces Increase Of Line Of Credit Facility
Credit Acceptance Corporation announced that it has increased the amount of its line of credit facility with a commercial bank syndicate from $133.5 million to $153.5 million. Other than described above, there were no material changes to the terms of the line of credit facility. As of February 26, 2008, the Company had $56.5 million outstanding under the facility.
