Prospect Capital funded a recapitalization of Nationwide Acceptance Corporation with $25.2 million of combined debt and equity financing. Milestone Advisors, (now part of Houlihan Lokey) served as exclusive financial advisor to Nationwide on the transaction.
Nationwide is a specialty finance business based in Chicago and operates in 22 states primarily as an indirect lender in the consumer auto loan business, where it purchases loans originated by the more than 800 active used car dealers it covers. In the past year, Nationwide has financed the purchase of more than 7,000 automobiles. In addition, Nationwide operates in Illinois a small non-auto lending business making loans directly to consumers. Nationwide employs more than 120 people and has an aggregate loan portfolio in excess of $100 million.
Led by CEO Martin Less, senior management of Nationwide invested alongside Prospect and owns, directly and through various incentive plans, approximately 6.2% of the fully-diluted economic interests in Nationwide. Prospect is the controlling shareholder of Nationwide. Wells Fargo provided a $75.0 million revolving credit facility.
Prospect expects Nationwide to pay out substantially all of its income in the form of dividends on a go-forward basis, providing for an attractive current yield to Prospect and to Nationwide's management owners. Prospect structured the acquisition of Nationwide using tax-advantaged limited liability companies.
"We are pleased to be partnering with the Nationwide management team and look forward to supporting continued profitable growth, including acquisitions, for the business," said Ted Fowler, a managing director of Prospect Capital Management LLC.
"Prospect has worked extensively to understand the auto finance industry and Nationwide's long-term track record," said Martin Less, CEO of Nationwide. "Leveraging our broad footprint and the capital backing that Prospect provides, we anticipate continuing to deliver profitable growth by expanding our business in current states as well as new expansion states."