Credit Acceptance Corporation filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Other Events, Financial Statements and Exhibits
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Finance: Consumer Services
Finance
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): February 28, 2025
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Item 1.01 Entry into a Material Definitive Agreement.
On February 28, 2025, Credit Acceptance Corporation (referred to as the “Company,” “we,” “our,” or “us”) issued $500.0 million aggregate principal amount of 6.625% Senior Notes due 2030 (the “notes”). The notes were issued pursuant to an indenture, dated as of February 28, 2025 (the “Indenture”), among the Company, the Company’s subsidiaries Buyers Vehicle Protection Plan, Inc. and Vehicle Remarketing Services, Inc. (collectively, the “Guarantors”), and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The description of the Indenture and the notes contained in this report is qualified in its entirety by reference to the complete text of the Indenture (which includes the form of the notes), a copy of which is filed as Exhibit 4.145 to this report and incorporated herein by reference.
The notes mature on March 15, 2030 and bear interest at a rate of 6.625% per annum, computed on the basis of a 360-day year composed of twelve 30-day months and payable semi-annually on March 15 and September 15 of each year, commencing on September 15, 2025.
The notes are guaranteed on a senior basis by the Guarantors, which are also guarantors of obligations under the Company’s 9.250% senior notes due 2028 (the “2028 notes”) and the Sixth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”), by and among the Company, Comerica Bank and the other banks signatory thereto, and Comerica Bank, as administrative agent and collateral agent for the banks. Other existing and future subsidiaries of the Company may become guarantors of the notes in the future. The Indenture provides for a guarantor of the notes to be released from its obligations under its guarantee of the notes under specified circumstances.
The Company may redeem some or all of the notes, at its option, at any time and from time to time on and after March 15, 2027 at a redemption price (expressed as a percentage of the principal amount of the notes to be redeemed) of 103.313%, declining to 101.656% on March 15, 2028 and declining to 100.000% on March 15, 2029, in each case plus accrued and unpaid interest thereon, if any, to but excluding the redemption date. At any time and from time to time prior to March 15, 2027, the Company may redeem some or all of the notes at a price equal to 100% of the principal amount of the notes redeemed, plus a “make-whole” premium set forth in the Indenture and accrued and unpaid interest thereon, if any, to but excluding the redemption date. In addition, at any time on or prior to March 15, 2027, the Company may, on any one or more occasions, redeem up to 40% of the aggregate principal amount of the notes with the net cash proceeds of certain equity offerings at a redemption price of 106.625% of the principal amount of the notes redeemed, plus accrued and unpaid interest thereon, if any, to but excluding the redemption date.
If the Company experiences specified change of control events involving a change of control accompanied by a downgrade of the credit rating of the notes, the Company must offer to repurchase the notes at an offer price equal to 101% of the aggregate principal amount of the notes to be repurchased, plus accrued and unpaid interest thereon, if any, to but excluding the applicable repurchase date. Under specified circumstances, the Indenture requires the Company to use net proceeds from certain dispositions of assets to offer to repurchase notes at a repurchase price equal to 100% of the principal amount of the notes repurchased, plus accrued and unpaid interest thereon, if any, to but excluding the applicable repurchase date.
The Indenture also contains covenants that limit the ability of the Company and its subsidiaries to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay dividends or purchase capital stock; (iii) make investments; (iv) sell assets; (v) incur liens; (vi) merge, consolidate or sell all or substantially all of their assets; and (vii) enter into transactions with affiliates. These covenants are subject to a number of important limitations and exceptions, including the suspension of certain of these covenants upon the notes receiving an investment grade credit rating.
The Indenture provides for customary events of default. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding notes will become due and payable immediately without further action or notice. If any other event of default under the Indenture occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the then outstanding notes may declare all the notes to be due and payable immediately.
The notes and the related note guarantees have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from registration requirements. This report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the notes or the related note guarantees in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Certain of the initial purchasers of the notes and their affiliates have from time to time performed and may in the future perform various financial advisory, commercial banking, investment banking and other services for us and our affiliates in the ordinary course of business, for which they have received or will receive customary compensation. Affiliates of or entities administered by certain of the initial purchasers are lenders, agents or backup servicers under our revolving secured warehouse facilities. Affiliates of certain of the initial purchasers are lenders and/or agents under the Credit Agreement. In addition, certain initial purchasers and their affiliates are parties to our asset-backed financing transactions. U.S. Bank Trust Company, National Association serves as trustee with respect to the 2028 notes. U.S. Bank Trust National Association, an affiliate of U.S. Bank Trust Company, National Association, serves as owner trustee of the issuing trust in our outstanding asset-backed financing transactions entered into before April 2023.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information in Item 1.01 of this report is incorporated by reference into this Item 2.03.
Item 8.01 Other Events.
On February 28, 2025, the Company issued a press release announcing the closing of the offering of the notes and the closing of the Company’s previously announced redemption of all of its outstanding 6.625% senior notes due 2026. The press release is filed as Exhibit 99.1 to this report and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | ||||
| Indenture, dated as of February 28, 2025, among Credit Acceptance Corporation, the Guarantors named therein, and U.S. Bank Trust Company, National Association, as trustee. | |||||
| Press release dated February 28, 2025. | |||||
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CREDIT ACCEPTANCE CORPORATION | |||||||||||
| Date: February 28, 2025 | By: | /s/ Douglas W. Busk | |||||||||
| Douglas W. Busk | |||||||||||
| Chief Treasury Officer | |||||||||||