Santander Consumer USA Looks to Generate $50M Through IPO
Santander Consumer USA is going public.
According to documents filed with the Securities and Exchange Commission last week, Santander Consumer USA intends to use the net proceeds received through the $50 million initial public offering for general corporate purposes.
The SEC documents show the majority owner of Santander Consumer USA is Banco Santander, the bank based in Madrid, Spain. Funds managed by Centerbridge Partners, KKR & Co. and Warburg Pincus, own a 25-percent stake in the finance company, while the remaining 10 percent is owned by chief executive officer Thomas Dundon.
Last Wednesday's filing continues a pattern of noteworthy developments associated with Santander Consumer USA during the past 12 months.
Documents posted with the SEC last September showed Santander Consumer USA entered into an agreement to purchase DriveTime Automotive Group through a $700 million transaction, a deal that would have given the finance company a total of 91 dealerships and DriveTime's related finance company, DT Acceptance.
However, two months later, the deal dissolved. DriveTime officials sent notice to the SEC and indicated they made the decision about the selling agreement first reached on Sept. 11 "due to certain unsatisfied conditions to the closings of the transactions contemplated."
Then in January, reports first surfaced that Chrysler Group was going to choose Santander Consumer USA to be its in-house finance company. The relationship eventually did come to be as Chrysler Capital — an entity designed to provide Chrysler, Jeep, Dodge, Ram Truck, SRT and Fiat customers with competitive retail purchase and lease financing and provide wholesale financing and related services to Chrysler Group and Fiat dealers — officially started operating on May 1.
The SEC filing connected with the IPO shed more light on what Santander Consumer USA had to do to get Chrysler Capital up and running and what it needs to accomplish for the domestic OEM.
"In accordance with the terms of the Chrysler agreement, in May 2013 we paid Chrysler a $150 million upfront, nonrefundable payment, which will be amortized over 10 years but would be recognized as expense immediately if the Chrysler agreement is terminated in accordance with its terms," Santander Consumer USA officials said.
"As part of the Chrysler agreement, we received limited exclusivity rights to participate in specified minimum percentages of certain of Chrysler's financing incentive programs, which include loan rate subvention and automotive lease residual support subvention," they continued.
"We have committed to certain revenue sharing arrangements, as well as to considering future revenue sharing opportunities," officials went on to say. "We will bear the risk of loss on loans originated pursuant to the Chrysler Agreement, but Chrysler will share in any residual gains and losses in respect of automotive leases, subject to specific provisions in the Chrysler agreement, including limitations on our participation in gains and losses.