Credit Acceptance Corporation (NASDAQ: CACC) has announced the completion of a $600.0 million asset-backed non-recourse secured financing. In this transaction, the company conveyed loans valued at approximately $750.2 million to a special purpose entity, which then transferred the loans to a trust issuing three classes of notes.
The note classes and details are as follows: Note Class A: $316,464,000, average life of 2.45 years, price at 99.98629%, and an interest rate of 4.68% Note Class B: $121,668,000, average life of 3.08 years, price at 99.97303%, and an interest rate of 4.85% * Note Class C: $161,868,000, average life of 3.53 years, price at 99.98737%, and an interest rate of 5.39%
The financing is expected to have an average annualized cost of approximately 5.2%, including initial purchasers' fees and other costs. It will revolve for 24 months and then amortize based on the cash flows from the conveyed loans.
Additionally, the company 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 ongoing financing costs.
This financing will be used to repay outstanding indebtedness and for general corporate purposes. It is structured to not affect contractual relationships with dealers and to preserve the dealers' rights to future payments of dealer holdback.
Notably, 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.
Credit Acceptance Corporation is a company that makes vehicle ownership possible by providing innovative financing solutions, enabling automobile dealers to sell vehicles to consumers regardless of their credit history. The company's financing programs are offered through a nationwide network of automobile dealers. Without these financing programs, consumers are often unable to purchase vehicles or end up with unreliable ones.
As of the most recent financial release, the company's financing programs have assisted in conveying loans worth approximately $750.2 million to a special purpose entity. The classes of notes issued as a result of this conveyance include Note Class A at $316,464,000, Note Class B at $121,668,000, and Note Class C at $161,868,000.
The average life of these notes varies, with Note Class A having an average life of 2.45 years, Note Class B at 3.08 years, and Note Class C at 3.53 years. The prices of these notes have been reported at 99.98629%, 99.97303%, and 99.98737%, respectively. Additionally, the interest rates for these notes range from 4.68% to 5.39%.
This financing is expected to have an average annualized cost of approximately 5.2%, including initial purchasers' fees and other costs. It will revolve for 24 months and then amortize based on the cash flows from the conveyed loans.
The company will receive 4.0% of the cash flows related to the underlying consumer loans to cover servicing expenses, while the remaining 96.0% will be used to pay principal and interest on the notes as well as ongoing financing costs.
The financing is structured to not affect contractual relationships with dealers and to preserve the dealers' rights to future payments of dealer holdback. The market has reacted to these announcements by moving the company's shares -0.7% to a price of $432.0. If you want to know more, read the company's complete 8-K report here.
