Credit Acceptance Corporation completes $300 million asset-backed financing, conveying $375.1 million in loans to enhance corporate liquidity.
Quiver AI Summary
Credit Acceptance Corporation announced the completion of a $300 million asset-backed non-recourse secured financing deal, where approximately $375.1 million in loans were conveyed to a special purpose entity. This financing will involve issuing three classes of notes with varying interest rates, and it is expected to have an average annualized cost of about 6.3%. The financing is structured to last for 36 months, after which it will amortize based on the cash flows from the loans. Funds will be used to repay outstanding debts and for general corporate purposes, while the company retains 4% of the cash flows for servicing expenses. Credit Acceptance helps consumers with poor credit histories obtain vehicle financing, allowing dealerships to sell more vehicles and enabling consumers to improve their credit scores. The company is publicly traded on Nasdaq under the symbol CACC.
Potential Positives
- Completion of a $300.0 million asset-backed non-recourse secured financing enhances liquidity and financial flexibility for Credit Acceptance Corporation.
- The structure of the financing allows the company to retain 4.0% of cash flows related to the underlying consumer loans, supporting the company's servicing expenses.
- The financing is designed not to affect existing contractual relationships with dealers, preserving dealer rights to future payments of dealer holdback, thus maintaining strong partnerships.
- The ability to repay outstanding indebtedness and use funds for general corporate purposes indicates a strategy focused on financial health and operational efficiencies.
Potential Negatives
- The asset-backed financing indicates the company may be facing liquidity challenges, relying on external funding to manage cash flow and outstanding debts.
- The average annualized cost of approximately 6.3% for the financing may suggest higher borrowing costs, which could impact profitability and financial stability.
- Utilizing a special purpose entity for the financing could raise concerns regarding transparency and risk management practices among investors and stakeholders.
FAQ
What is the purpose of Credit Acceptance's $300 million financing?
The financing will be used to repay outstanding indebtedness and for general corporate purposes.
How are the loans structured in this financing?
The loans, valued at approximately $375.1 million, are conveyed to a special purpose entity that pledges them to institutional lenders.
What are the interest rates for the note classes issued?
The interest rates for the note classes are A: 5.79%, B: 6.03%, and C: 6.67%.
How does this financing affect dealers in the Credit Acceptance network?
The financing is structured to preserve dealers' rights to future payments of dealer holdback and does not affect contractual relationships.
What benefits do Credit Acceptance's financing programs provide consumers?
Consumers can purchase vehicles regardless of credit history, improve their credit scores, and access traditional financing opportunities.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
$CACC Insider Trading Activity
$CACC insiders have traded $CACC stock on the open market 10 times in the past 6 months. Of those trades, 2 have been purchases and 8 have been sales.
Here’s a breakdown of recent trading of $CACC stock by insiders over the last 6 months:
- JONATHAN LUM (Chief Operating Officer) sold 552 shares.
- GENERAL PARTNERS LLC PRESCOTT has traded it 3 times. They made 2 purchases, buying 4,000 shares and 1 sale, selling 11,586 shares.
- THOMAS W SMITH sold 1,200 shares.
- DANIEL A. ULATOWSKI (Chief Sales Officer) has traded it 5 times. They made 0 purchases and 5 sales, selling 2,000 shares.
To track insider transactions, check out Quiver Quantitative's insider trading dashboard.
$CACC Hedge Fund Activity
We have seen 100 institutional investors add shares of $CACC stock to their portfolio, and 139 decrease their positions in their most recent quarter.
Here are some of the largest recent moves:
- WELLINGTON MANAGEMENT GROUP LLP removed 78,757 shares (-12.7%) from their portfolio in Q3 2024
- ALFRETON CAPITAL LLP added 71,872 shares (+73.2%) to their portfolio in Q3 2024
- CROW'S NEST HOLDINGS LP removed 67,500 shares (-100.0%) from their portfolio in Q3 2024
- QUANTUM CAPITAL MANAGEMENT, LLC / NJ removed 58,883 shares (-74.4%) from their portfolio in Q3 2024
- ABRAMS BISON INVESTMENTS, LLC added 53,306 shares (+30.5%) to their portfolio in Q3 2024
- ALPHA WAVE GLOBAL, LP removed 28,721 shares (-100.0%) from their portfolio in Q3 2024
- GLOBAL ENDOWMENT MANAGEMENT, LP added 28,632 shares (+825.1%) to their portfolio in Q3 2024
To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.
Full Release
Southfield, Michigan, Dec. 20, 2024 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq: CACC) (the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) announced today the completion of a $300.0 million asset-backed non-recourse secured financing (the “Financing”). Pursuant to this transaction, we conveyed loans having a value of approximately $375.1 million to a wholly owned special purpose entity that will pledge the loans to institutional lenders under a loan and security agreement. We will issue three classes of notes:
| Note Class | Amount | Interest Rate | ||||||
| A | $ | 139,220,000 | 5.79 | % | ||||
| B | $ | 62,180,000 | 6.03 | % | ||||
| C | $ | 98,600,000 | 6.67 | % | ||||
The Financing will:
- have an expected average annualized cost of approximately 6.3% including upfront fees and other costs;
- revolve for 36 months after which it will amortize based upon the cash flows on the conveyed loans; and
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be used by us to repay outstanding indebtedness and for general corporate purposes.
We 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 to the institutional lenders as well as the ongoing costs of the Financing. The Financing is structured so as not to affect our contractual relationships with dealers and to preserve the dealers’ rights to future payments of dealer holdback.
Description of Credit Acceptance Corporation
We make vehicle ownership possible by providing innovative financing solutions that enable automobile dealers to sell vehicles to consumers regardless of their credit history. Our financing programs are offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing; from repeat and referral sales generated by these same customers; and from sales to customers responding to advertisements for our financing programs, but who actually end up qualifying for traditional financing.
Without our financing programs, consumers are often unable to purchase vehicles or they purchase unreliable ones. Further, as we report to the three national credit reporting agencies, an important ancillary benefit of our programs is that we provide consumers with an opportunity to improve their lives by improving their credit score and move on to more traditional sources of financing. Credit Acceptance is publicly traded on the Nasdaq Stock Market under the symbol CACC. For more information, visit creditacceptance.com .
