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CPS Announces Placement of $25M in Subordinated Debt Agreement

19 November 1998

CPS Announces Placement of $25 Million in Subordinated Debt Agreement For Improved Securitization Structures


    IRVINE, Calif.--Nov. 18, 1998--Consumer Portfolio Services Inc. Wednesday announced that it has completed a private placement of $25 million in subordinated notes with Levine Leichtman Capital Partners II L.P. (LLCP), a California limited partnership.
    In conjunction with the financing, LLCP will receive warrants to purchase approximately 14 percent of the company's fully diluted common stock.
    Following the close of the transaction the company also announced the appointment of Arthur E. Levine, a principal of LLCP, to the company's board of directors.
    Levine Leichtman Capital Partners is a private investment firm with in excess of $400 million of institutional capital for investment in middle market companies primarily headquartered in the Western United States. The firm provides debt and equity capital to companies for growth and expansion.
    Levine stated, "We are very pleased to make an investment in Consumer Portfolio Services Inc. We believe the company is a leader in its industry and has a strong and experienced management team."
    In addition, the company announced that it had entered into an agreement with Financial Security Assurance Inc. ("FSA") to provide financial guarantee insurance policies for up to $560 million of automobile receivables. The agreement calls for the company to post an initial cash credit enhancement of 3.0 percent of the receivables in each of the next two securitization transactions.
    In conjunction with this agreement, the company has agreed to grant FSA, on behalf of itself and its reinsurers, warrants to purchase up to approximately 10 percent of the company's fully diluted common stock.
    "We are pleased to have completed these important financing transactions and are looking forward to a long and mutually beneficial relationship with our partners," reported Charles E. Bradley, Jr., the company's president and chief executive officer.
    Consumer Portfolio Services is a purchaser, seller and servicer of installment sales contracts secured by automobiles, vans, and light trucks. The company purchases contracts from over 4,000 dealers in 40 states and services a portfolio in excess of $1.5 billion.