GAC Announces Increased and Extended Credit Line and Interest Rate Reduction.

BLOOMINGTON, Ind.--(BUSINESS WIRE)--Sept. 17, 1997--General Acceptance Corp. today announced that it has reached an agreement with its primary lender to extend and increase its credit line, to reduce the interest rate thereunder and to amend certain financial covenants so as to eliminate all existing events of default.

The credit line, which was due to expire at the end of 1997, has been extended to Jan. 1, 1999. As of Jan. 1, 1998, the amount of the credit line will increase to $100.0 million from its current level of $70.0 million. Effective immediately, the interest rate has been reduced by 1.25 percent from LIBOR plus 4.50 percent to LIBOR plus 3.25 percent.

This agreement gives the company access to sufficient funding, at a competitive interest rate, to finance its contract acquisition and origination objectives through the end of 1998.

As part of the transaction, Conseco Inc. has agreed to guarantee up to $10.0 million of the company's indebtedness to its primary lender. The guarantee can be called by the lender only upon the occurrence of certain events of default. Any amounts funded by Conseco under the guarantee would trigger the issuance by the company of a like amount of 12.00 percent convertible subordinated debt to Conseco. Any newly issued convertible subordinated debt would be convertible into common stock of the company at a conversion price of the then current book value per share, but not less than 25 cents. In connection with the guarantee, the company issued to Conseco warrants to purchase 500,000 shares of common stock at an exercise price of $1.00 per share. As a result of the issuance of the warrants, the conversion price on the previously issued $13.25 million of convertible subordinated debt is reduced to $1.00 per share.

If the holders (an affiliate of Conseco and certain principal stockholders and their relatives) of the $13.25 million of convertible subordinated debt each converted their notes to common stock of the company, and Conseco exercised its 500,000 warrants, Conseco would own approximately 53 percent of the total outstanding common stock of the company.

The company also agreed to issue $1.5 million of 12.00 percent convertible subordinated debt in exchange for a like amount of 12.00 percent unsecured debt held by certain principal stockholders. This convertible subordinated debt has terms identical to the debt issuable to Conseco in connection with any amounts funded under the guarantee, except that this debt is not convertible until conversion by Conseco.

The effectiveness of the warrants and the conversion feature of the $10.0 million of convertible subordinated debt issuable to Conseco and the $1.5 million of convertible subordinated debt issued to certain principal stockholders are each subject to approval by shareholders at an upcoming special shareholders' meeting. Subject to such approval, each would be exercisable or convertible as described above, and the conversion price on the existing $13.25 million of convertible subordinated debt would be reduced as described above.

In addition, the company announced that it has expanded its board of directors to eight members and that Richard J. Corey, the company's corporate secretary, has been selected to fill one of the vacancies for a term expiring at the annual shareholders' meeting in 1998. The other vacancy will be filled by a Conseco nominee.

The company also announced that it has closed two company-owned dealerships due to unsatisfactory performance, and that it has put further expansion of its company-owned dealership network on hold through the end of 1997.

General Acceptance Corp. is a specialized consumer finance company principally engaged in purchasing and servicing installment sale contracts relating to the sale of used automobiles to consumers with limited access to traditional financing sources. The company acquires these contracts from used vehicle dealerships operated by the company as well as from unaffiliated dealers. The company is headquartered in Bloomington, and has regional offices in Indiana, Ohio and Florida and company-owned used vehicle dealerships in Indiana, Ohio, Florida, Missouri and Illinois.

The company's stock is traded on NASDAQ under the symbol "GACC."

CONTACT: General Acceptance Corp.

Martin C. Bozarth, 812/337-6023