Arcadia On Alert-Pos; Associates Affirmed Following Merger.NEW YORK--(BUSINESS WIRE)--Nov. 15, 1999-- The 'AA-' senior debt rating for Associates First Capital Corp. (AFCC AFCC Association of Family and Conciliation Courts AFCC Air Force Communications Command AFCC Arts Foundation of Cape Cod AFCC Automotive Fuel Cell Cooperation Corp. (Daimler AG, Ford Motor Company, and Ballard Power Systems) ), the 'AA' senior debt rating for Associates Corp. of North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. (ACONA ACONA Advisory Council On Naval Affairs ), and all affiliated ratings for the two entities are affirmed by Fitch IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals . The 'B' senior debt rating of Arcadia Financial Ltd. is placed on RatingAlert-Positive following today's announcement that AFCC will acquire Arcadia for approximately $200 million in cash, plus a residual value Residual value Usually refers to the value of a lessor's property at the time the lease expires. residual value The price at which a fixed asset is expected to be sold at the end of its useful life. obligation, which will participate in cash flows in excess of agreed-upon amounts released from Arcadia's existing securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. transactions. Upon completion of the acquisition, it is expected that Arcadia's rating will be equalized with AFCC. Associates' ratings reflect the company's solid operating performance over several business cycles, highly diversified receivables portfolio, strong market positions in many of its key business segments, and well-focused operating strategy. The acquisition of Arcadia will expand Associates' presence in the nonprime/subprime automobile financing sector. As of Sept. 30, 1999, Arcadia maintained $5.2 billion of managed nonprime/subprime automobile finance receivables, originating approximately $600 million a quarter, which is nearly double Associates quarterly origination production. Concerns with Associates at this time center on the effect of high consumer bankruptcies with its credit card and unsecured lending portfolios, the rapid growth in receivables and goodwill and their impact on capitalization, and the pressures associated with being a publicly held company. Arcadia's ratings will benefit from the financial resources available from Associates. Going forward, Associates intends on funding the majority of nonprime/subprime automobile originations, on-balance sheet, which is more cost-effective than the securitizations previously being executed by Arcadia. |
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