Credit Acceptance Corp. Announces Completion of First Securitization.SOUTHFIELD, Mich.--(BUSINESS WIRE)--July 8, 1998--Credit Acceptance Corp. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CACC CACC Center for Animal Care and Control CACC Canadian Association for Community Care CACC Central Alabama Community College CACC Chilterns Association of Camera Clubs (United Kingdom) ) announced today the completion of its first 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. . Pursuant to this transaction, the company contributed dealer advances having a net book value of approximately $56 million to a wholly-owned special purpose corporation (the "SPC 1. (business) SPC - Statistical Process Control. Something to do with quality management. 2. (body) SPC - Software Productivity Centre. 3. (company) SPC - Software Publishing Corporation. 4. ") and received approximately $50 million in financing from an institutional investor Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. . The financing bears interest at a floating rate equal to the thirty day commercial paper rate plus 1 percent with a maximum rate of 7.5 percent, is anticipated to fully amortize within thirty months, and is secured by the dealer advances and the rights to collections on the related installment contracts receivable contributed to the SPC up to the sum of the related dealer advance and the company's servicing fee. The company will receive a monthly servicing fee equal to 4 percent of the collections of the contributed installment contracts receivable. Amounts due to dealers in respect of payments of dealer holdbacks will be remitted to the company for distribution to the respective dealers on a monthly basis. Except for a servicing fee and payments due to dealers, the company will not receive any portion of collections on the installment contracts receivable until the underlying indebtedness has been repaid in full. Donald A. Foss, founder and chairman of the company, stated: "We are pleased to diversify the company's funding alternatives while fully protecting all of the rights of our participating dealers." Using a unique securitization structure, the company was able to fully preserve the rights of its dealers to future payments of dealer holdbacks. The securitization was structured by NationsBanc, Montgomery Securities, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . The proceeds of the transaction were used to reduce indebtedness under the company's line of credit and revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facilities. Concurrent with the completion of the securitization, the commitment level on the company's line of credit is reduced from $120 million to $96.3 million while the commitment level on the company's revolving credit facility is reduced from $80 million to $64.2 million. Credit Acceptance Corp. is a specialized financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. 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.
CONTACT: Credit Acceptance Corp., Southfield
Brett A. Roberts, 248/353-2700-423
Douglas W. Busk, 248/353-2700-432
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