Union Acceptance Corporation Sells $500 million in Receivables to Commercial Paper Facility

19 September 2000

Union Acceptance Corporation Sells $500 million in Receivables to Commercial Paper Facility

    INDIANAPOLIS--Sept. 19, 2000--Union Acceptance Corporation ("UAC") today announced that its subsidiary, UAC Securitization Corporation ("UACSC"), has sold $500 million in receivables to Special Purpose Accounts Receivable Cooperative Corp. ("SPARC"), a commercial paper conduit facility sponsored by CIBC World Markets Corp.
    The transaction is wrapped by a financial guaranty policy issued by MBIA Insurance Corporation, a subsidiary of MBIA Inc. . SPARC purchased a $500 million note backed by a pool of prime automobile receivables with proceeds from the issuance of commercial paper. The pool has a weighted average coupon of 13.57% and the fixed rate on the note is 6.903%.
    "The CIBC facility gave us the flexibility to obtain favorable long term financing this quarter without going through the public asset-backed market," commented Rick Brown, Chief Financial Officer. "Flexibility in funding sources is a key business strategy for us, particularly given our long-term view. We do expect to return to the public asset-backed market in the next quarter."
    Other sources of long term funding include 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.

    Corporate Description

    UAC is one of the nation's largest independent, indirect automobile finance companies. The Company's primary business is acquiring, securitizing and servicing prime retail installment sales contracts. These contracts are originated by dealerships affiliated with major domestic and foreign automobile manufacturers. The Company is focused on the upper-end of the credit quality spectrum. Union Acceptance Corporation commenced business in 1986 and currently acquires receivables from over 4,900 manufacturer-franchised dealerships in 39 states. By using state-of-the-art technology in a highly centralized underwriting and servicing environment, Union Acceptance Corporation enjoys one of the lowest cost operating structures in the independent prime automobile finance industry.

    Forward Looking Information

    This news release contains forward-looking statements regarding future availability and costs of funding and other matters. Readers are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, the future willingness of investors to purchase securities backed by the Company's consumer receivable portfolios, the relative unpredictability of changes in delinquency and credit loss rates, changes in acquisition volume, changes in market interest rates, general economic conditions that affect consumer loan performance and consumer borrowing practices and other important factors detailed in the Company's annual report on Form 10-K for the fiscal year ended June 30, 1999, which was filed with the Securities and Exchange Commission.