UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): May 27, 2008
CREDIT ACCEPTANCE CORPORATION
(Exact name of registrant as specified in its charter)
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| Michigan
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000-20202
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38-1999511 |
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| (State or other jurisdiction
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(Commission
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(I.R.S. Employer |
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File Number)
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Identification No.) |
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| 25505 West Twelve Mile Road, Suite 3000, |
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| Southfield, Michigan
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48034-8339 |
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| (Address of principal executive offices)
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(Zip Code) |
Registrant’s telephone number, including area code: 248-353-2700
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
TABLE OF CONTENTS
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| Item 1.01 |
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Entry Into a Material Definitive Agreement. |
The information set forth below under Item 2.03 is hereby incorporated by reference into this Item
1.01.
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| Item 2.03 |
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Creation of a Direct Financial Obligation or an Obligation under an Off- Balance Sheet Arrangement of a Registrant. |
On May 27, 2008, Credit Acceptance Corporation, (the “Company”) entered into a $50.0 million
asset-backed non-recourse secured financing. The parties to this transaction are the Company, as
servicer, CAC Warehouse Funding III, LLC (“Funding III”), as borrower, Fifth Third Bank (the
“Agent”), as investor and agent, Relationship Funding Company LLC, as lender, and Systems &
Services Technologies, Inc., as backup servicer. During the first two years of this financing, the
Company may contribute loans to Funding III in exchange for the sole membership interest in Funding
III, and cash in an aggregate amount of up to the lesser of $50.0 million or 80% of the contributed
loans.
The terms and conditions of this transaction are set forth in the agreements attached hereto as
Exhibits 4(f)(109) through 4(f)(112), which agreements are incorporated herein by reference. This
transaction is also summarized in a press release issued by the Company on May 27, 2008, which is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.
On May 27, 2008, the Company conveyed loans having a net book value of approximately $62.5 million
to Funding III, which, in turn, issued $50.0 million in notes to a qualified institutional investor
in a private transaction exempt from the registration requirements of the Securities Act of 1933.
Accordingly, such notes have not been and will not be registered under the Securities Act of 1933
and may not be offered or sold in the United States absent registration or an applicable exemption
from registration requirements.
Such notes will bear interest at a floating rate equal to the commercial paper rate plus 77.5 basis
points. The floating portion of the rate is hedged using an interest rate cap with a maximum rate
of 6.75%. The proceeds of the initial conveyance to Funding III were used by the Company to repay
outstanding indebtedness. Through May 23, 2010, the Company may be required, and is likely, to
convey additional loans to Funding III. After May 23, 2010, the debt outstanding under this
facility will begin to amortize.
The secured financing creates loans for which Funding III is liable and which are secured by all
the assets of Funding III. Such loans are non-recourse to the Company even though Funding III and
the Company are consolidated for financial reporting purposes. The Company will receive a servicing
fee of 6.0% of the cash flows related to the underlying consumer loans. The remaining 94.0%, less
amounts due to dealer-partners for payments of dealer holdback, will be used to pay principal and
interest on the notes as well as the ongoing costs of the financing. Except for the Company’s
servicing fee and payments due to dealer-partners, the Company does not receive, or have any rights
in, any portion of such collections until Funding III’s underlying indebtedness is paid in full,
either through collections or through a prepayment of the indebtedness. Thereafter, remaining
collections would be paid over to Funding III where they would be available to be distributed to
the Company as the sole member of Funding III, or the Company may choose to cause Funding III to
repurchase the remaining loans and then dissolve, whereby the Company would become the owner of
such remaining collections.