Union Acceptance Announces Increase in Commercial Paper Conduit
28 August 2000
Union Acceptance Corporation Announces Increase in Commercial Paper Conduit to $500 Million
INDIANAPOLIS--Aug. 28, 2000--Union Acceptance Corporation ("UAC") today announced that its subsidiary, UAC Securitization Corporation ("UACSC"), has increased its commercial paper conduit to $500 million. The facility is with CIBC World Markets through its Special Purpose Accounts Receivable Cooperative Corp. ("SPARC") conduit. The facility, when utilized, will be wrapped by a financial guaranty policy issued by MBIA Insurance Corporation, a subsidiary of MBIA Inc. .The commercial paper facility with CIBC World Markets was closed in early fiscal 2000, with a $250 million capacity. The facility's capacity was increased to $375 million in March 2000. This most recent increase raises the capacity to $500 million. The facility allows for the purchase, by SPARC, of amortizing notes backed by one or more pools of prime retail installment sales contracts acquired by UAC. In the event the facility is used, SPARC will purchase the notes with proceeds from the issuance of commercial paper.
"This increase was beneficial in allowing us to consider this facility as a viable alternative to financing through the public asset-backed market," commented Rick Brown, Chief Financial Officer. "As we evaluate funding sources, our models suggest that the use of the commercial paper facility may be more profitable this quarter than financing through the public asset-backed market. Therefore, as long as market conditions remain stable, we will likely forego a public securitization and fund our receivables through the commercial paper facility this quarter. While we have a strong history of successful public asset-backed securitizations and will return to that funding source, we are very pleased that, for this quarter, we have the alternative."
In addition to the commercial paper conduit, external financing also includes two revolving warehouse facilities through Bank of America with total capacity of $550, and a revolving warehouse through First Union Securities with a capacity of $200 million. Other sources of liquidity are funds from operations, long-term debt and securitization transactions. UACSC recently increased its "shelf" registration with the Securities and Exchange Commission for future public asset-backed securitization transactions by $3.0 billion. The Company also maintains a $15 million unsecured line of credit.