Credit Acceptance Announces Completion of $100 Million Asset-Backed Financing

Credit Acceptance Corporation (NASDAQ: CACC) announced today the completion of a $100.0 million asset-backed non-recourse secured financing, its fourteenth asset-backed financing. Pursuant to this transaction, the Company contributed dealer loans having a net book value of approximately $125.6 million to a wholly owned special purpose entity which transferred the dealer loans to a Trust, which issued $100.0 million in notes to qualified institutional investors. The proceeds will be used by the Company to repay outstanding indebtedness. The notes bear interest at a fixed rate of 5.38%. The expected annualized cost of the financing, including underwriter’s fees, insurance premiums and other costs, is approximately 7.4%. It is anticipated that the notes will be repaid in approximately 22 months.

This transaction represents the Company’s fourth sale of notes to qualified institutional investors under SEC Rule 144A. Radian Asset Assurance issued the primary financial insurance policy in connection with the transaction, while XL Capital Assurance issued a backup insurance policy. The policies guarantee the timely payment of interest and ultimate repayment of principal on the final scheduled distribution date. The notes are rated “Aaa” by Moody’s Investor Services and “AAA” by Standard & Poor’s Rating Services.

The Company will receive 6.0% of the cash flows related to the underlying consumer loans to cover servicing expenses. The remaining 94.0%, less amounts due to dealer-partners for payments of dealer holdback, will be used to pay principal and interest on the notes as well as the ongoing costs of the financing. Using a unique financing structure, the Company’s contracted relationship with its dealer-partners remains unaffected with the dealer-partners’ rights to future payments of dealer holdback preserved.

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. This news release does not and will not constitute an offer to sell or the solicitation of an offer to buy the notes. This news release is being issued pursuant to and in accordance with Rule 135c under the Securities Act of 1933.

Credit Acceptance has provides auto loans to consumers, regardless of their credit history.