Credit Acceptance completed a $600 million asset-backed non-recourse secured financing. Pursuant to this transaction, the company conveyed loans having a value of approximately $750.2 million to a wholly owned special purpose entity which will transfer the loans to a trust, which will issue three classes of notes._x000D_
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The financing will:_x000D_
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- Have an expected average annualized cost of approximately 5.2%, including the initial purchasers’ fees and other costs
- Revolve for 24 months after which it will amortize based upon the cash flows on the conveyed loans
- Be used by us to repay outstanding indebtedness and for general corporate purposes
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Credit Acceptance 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 on the notes 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.
