Both Credit Acceptance Corp. and Consumer Portfolio Services made financial announcements this week; one a tender offer to purchase its own shares of common stock and the other the closing of its third term securitization of the year.

Starting with Credit Acceptance, the company commenced a tender offer to purchase up to 995,698 shares of its outstanding common stock at a price of $125.54 per share.

“We anticipate that we will obtain all of the funds necessary to purchase shares tendered in the tender offer, and to pay related fees and expenses, by borrowing under our revolving secured line of credit facility and/or one or more of our revolving secured warehouse facilities,” Credit Acceptance officials said. “The tender offer is not conditioned upon the receipt of financing.”

The company indicated it evaluated operations, strategy and expectations for the future.

“We believed that the tender offer is a prudent use of our financial resources given our business profile, assets and the current market price for our shares,” Credit Acceptance said.

As of Monday, the company determined that it had $429.5 million in unused and available capacity on its revolving secured line of credit facility and revolving secured warehouse facilities.

“We believe that the tender offer represents a mechanism to provide all shareholders with the opportunity to tender all or a portion of their shares and, thereby, receive a return of the company's capital if they so elect,” officials said. “This format of repurchase also provides a method for shareholders not participating to increase their relative percentage interest in Credit Acceptance and our future operations at no additional cost.

“As a result, we believe that investing in our own shares in this manner is an attractive use of capital and an efficient means to provide value to shareholders,” they continued. “The tender offer also provides liquidity to shareholders (particularly those with large shareholdings) by providing them the opportunity to sell all or a portion of their shares at a price of $125.54 per share without potential disruption to the share price and the usual transaction costs associated with market sales.”

Credit Acceptance pointed out the tender offer will expire at 5 p.m. ET on Oct. 20, unless extended by the company.

The company pointed out tenders of shares must be made on or prior to the expiration of the tender offer and shares may be withdrawn at any time on or prior to the expiration of the tender offer. 

“Our obligation to purchase shares in the tender offer is not conditioned upon any minimum number of shares being tendered,” officials said. “The tender offer is, however, subject to the conditions set forth in the Offer to Purchase and related Letter of Transmittal documents being sent to shareholders.

Under the tender offer, shareholders of Credit Acceptance common stock are invited to choose how many shares they are willing to sell to the company at $125.54 per share. 

If more than the maximum number of shares sought is tendered, Credit Acceptance explained that tendering shareholders owning fewer than 100 shares, or “odd lot” holders, will have their shares purchased without proration and all other tendered shares will be purchased on a pro rata basis, subject to the conditional tender provisions described in the Offer to Purchase. 

The company added that shareholders whose shares are purchased in the tender offer will be paid the purchase price net in cash, without interest, promptly after the expiration of the tender offer.  Shareholders whose shares are not purchased in the tender offer will have their shares returned, free of charge, promptly after the expiration of the tender offer, according to the company.

Credit Acceptance chairman Donald Foss has indicated his nonbinding intention to tender 4.0 million shares in the tender offer. Glenda Flanagan, one of the companay’s directors, has revealed that she may tender up to 25,000 shares in the tender offer.

The company said none of its other directors or officers have indicated their intention to tender shares in the tender offer.

As of Sept. 1, Credit Acceptance had 21,593,588 shares outstanding. The last reported sale price of Credit Acceptance's common stock on the NASDAQ Global Select Market on Thursday, which was the last trading day prior to the announcing of the offer, was $125.54 per share.

CPS Makes $273 Million Senior Subordinate Asset-Backed Securitization

In other industry news, Consumer Portfolio Services announced the closing of its third term securitization of the year. The transaction is CPS’ 14th senior subordinate securitization since the beginning of 2011 and the second consecutive securitization to receive a triple A rating on the senior class of notes.

In the transaction, CPS highlighted, qualified institutional buyers purchased $273 million of asset-backed notes secured by automobile receivables purchased by the company.

The sold notes, issued by CPS Auto Receivables Trust 2014-C, consist of five classes. Ratings of the notes were provided by Standard & Poor's and DBRS and were based on the structure of the transaction, the historical performance of similar receivables and CPS's experience as a servicer.

Officials indicated the weighted average effective coupon on the notes is approximately 2.71 percent.

CPS noted the 2014-C transaction has initial credit enhancement consisting of a cash deposit equal to 1.00 percent of the original receivable pool balance. The company pointed out the final enhancement level requires accelerated payment of principal on the notes to reach overcollateralization of 4.00% of the then-outstanding receivable pool balance.

Furthermore, officials highlighted the transaction utilizes a pre-funding structure, in which CPS sold approximately $185.2 million of receivables this week and plans to sell approximately $87.8 million of additional receivables during October. This further sale is intended to provide CPS with long-term financing for receivables purchased primarily in the month of September.

“The transaction was a private offering of securities, not registered under the Securities Act of 1933, or any state securities law,” CPS said. “All of such securities having been sold, this announcement of their sale appears as a matter of record only.”