Credit Acceptance Corporation Announces Amendment of Loan Agreements
13 December 1999
Credit Acceptance Corporation Announces Amendment of Loan Agreements
SOUTHFIELD, Mich.--Dec. 10, 1999--Credit Acceptance Corporation announced today that amendments to its loan agreements have been approved by the holders of its senior notes and the members of its commercial bank syndicate.Such amendments were required as a result of the violation of the fixed charge coverage covenant in the Company's debt agreements which the lenders had temporarily waived. The amendments modify the calculation of the fixed charge coverage ratio. The amendments to the senior note agreements additionally provide for a 75 basis point increase in the interest paid on such notes effective December 1, 1999 and an additional 50 basis point increase effective January 15, 2000. As part of the amendment, the Company agreed to repurchase, at par, approximately $49.5 million principal amount of senior notes which will be funded from the proceeds of a securitization of dealer advances which the Company expects to complete by January 15, 2000. In connection with the repurchase of senior notes, the Company will accelerate the amortization of certain deferred debt issuance costs resulting in a charge of approximately $400,000 in the fourth quarter of 1999. The amendment to the bank credit agreement provides for an additional 25 basis point fee at any time that the principal amount outstanding under the credit facility exceeds 50% of the maximum amount of the facility. The credit agreement currently provides for a maximum of $125 million in borrowings, of which $28.6 million is currently outstanding.
The foregoing information regarding the completion of a securitization of advance receivables is "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995 and is subject to various uncertainties, including the failure to agree on final documentation for the transaction and the occurrence of a material adverse change in the Company's business or the financial markets in general prior to completing the transaction. There can be no assurance that the Company will be successful in completing such financing transaction. Additional discussion of factors affecting the Company's business is contained in the Company's most recent filings with the Securities and Exchange Commission, including the Company's Annual Report and Form 10-K for the year ended December 31, 1998 and Forms 10-Q for the quarters ended June 30, 1999 and September 30, 1999.
Credit Acceptance Corporation is a specialized financial services company which provides funding, receivables management, collection, sales training and related products and services to automobile dealers selling vehicles to consumers with limited access to traditional sources of consumer credit.