Credit Acceptance Completes $550.0 Million Asset-Backed Financing Transaction

Heading: Credit Acceptance Corporation Completes $550 Million Asset-Backed Financing Transaction

Credit Acceptance Corporation (Nasdaq: CACC) recently announced the successful completion of a $550 million asset-backed non-recourse secured financing. This strategic move involved conveying loans valued at approximately $687.7 million to a special purpose entity, which then transferred the loans to a trust. The trust will issue three classes of notes with varying amounts, average lives, and interest rates: Class A ($272.44 million, 2.5 years, 5.95%), Class B ($110.29 million, 3.16 years, 6.11%), and Class C ($167.27 million, 3.67 years, 6.70%).

The financing, with an expected average annualized cost of 6.5%, will revolve for 24 months before amortizing based on cash flows from the conveyed loans. The proceeds from this financing will be used to repay existing debt and for general corporate purposes. Credit Acceptance will receive 4% of the cash flows to cover servicing expenses, while the remaining 96% will cover principal, interest, and ongoing financing costs after dealer holdback payments.

This move by Credit Acceptance demonstrates a strategic approach to strengthen its financial position and manage existing liabilities. The company’s focus on maintaining positive relationships with dealers and preserving their rights to future payments highlights its commitment to operational continuity and customer satisfaction.

Investors and stakeholders are closely watching how this financing will impact Credit Acceptance’s market positioning and operational fluidity. The successful completion of this financing signifies the company’s ability to access capital markets efficiently and maintain a strong market presence.

Overall, this financing development is a significant milestone for Credit Acceptance Corporation and is expected to have a positive impact on its financial stability and growth prospects.

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