Credit Acceptance Corporation announced the completion of a $100.0 million asset-backed non-recourse secured financing (the “Financing”). Pursuant to this transaction, the company contributed approximately $125.1 million of loans to a wholly-owned special purpose entity that will pledge the loans to an institutional lender under a loan and security agreement.
The Financing will:
- Bear interest at one-month LIBOR plus 200 basis points;
- Revolve for 24 months after which it will amortize based upon the cash flows on the contributed loans; and
- Be used by the company to repay outstanding indebtedness and for general corporate purposes.
The company will receive 6.0% of the cash flows related to the underlying consumer loans to cover servicing expenses. he remaining 94.0%, less amounts due to dealers for payments of dealer holdback, will be used to pay principal and interest to the institutional lender as well as the ongoing costs of the Financing. The Financing is structured so as not to affect the company's contractual relationships with its dealers and to preserve the dealers’ rights to future payments of dealer holdback.
Additionally, the company announced that it extended the date on which its $300.0 million revolving secured warehouse facility will cease to revolve from July 26, 2022 to November 17, 2023. The interest rate on borrowings under the facility has been increased from LIBOR plus 200 basis points to LIBOR plus 210 basis points. There were no other material changes to the terms of the facility.
As of January 29, 2021, the company did not have a balance outstanding under the revolving secured warehouse facility.