Credit Acceptance plans $400 million senior notes offering

SOUTHFIELD, MI - Credit Acceptance Corporation (NASDAQ:CACC), a provider of financing solutions with a market capitalization of $6.06 billion, announced today its intention to offer $400 million in senior notes due 2030. According to InvestingPro data, the company maintains a strong financial position with liquid assets exceeding short-term obligations, demonstrated by an impressive current ratio of 20.09. The company aims to use the proceeds, along with existing cash, to redeem its outstanding 6.625% senior notes due in 2026.

The redemption aligns with the terms of the indenture governing the 2026 notes. Credit Acceptance also plans to cover the associated fees and expenses. Until the redemption is executed, the company may invest the proceeds in short-term investments or use them to repay borrowings under its revolving credit facility, without reducing the lenders’ commitments. With total debt of $6.35 billion and annual revenue of $928.2 million, this refinancing move could impact the company’s debt structure significantly. Want deeper insights? InvestingPro subscribers have access to over 30 additional financial metrics and exclusive analysis tools.

This offering is targeted exclusively at qualified institutional buyers as per Rule 144A under the Securities Act of 1933, as amended. The notes will not be registered under the Securities Act, and as such, cannot be offered or sold within the United States or to U.S. persons without registration or an exemption from registration requirements. Based on InvestingPro’s Fair Value analysis, the stock currently appears slightly overvalued at its current price of $502.71.

Credit Acceptance has stated that this press release does not constitute an offer to sell the notes nor does it obligate the company to issue a notice of redemption for the 2026 notes.

The company’s forward-looking statements, including those regarding the note offering and the application of its net proceeds, are subject to various risks and uncertainties. These could lead to actual results differing significantly from those projected. The risks are detailed in the company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 12, 2025, and in other reports filed with the SEC.

Credit Acceptance cautions readers not to place undue reliance on these forward-looking statements, which are valid only as of the date of the release. The company explicitly disclaims any obligation to update these statements for any new information or future events, except as required by law.

This news article is based on a press release statement from Credit Acceptance Corporation.

In other recent news, Credit Acceptance Corporation significantly outperformed earnings and revenue expectations for the fourth quarter of 2024. The company reported earnings per share (EPS) of $10.17, significantly higher than the anticipated $7.93, and a revenue of $565.9 million, surpassing the forecasted $522.6 million. The company’s loan portfolio also reached a record high of $8.9 billion, marking a 15% year-over-year increase.

In addition to these financial achievements, Credit Acceptance Corporation expanded its dealer network by adding 902 new dealers in Q4, bringing its total to 10,149 active dealers. The company also saw its market share in used vehicle subprime financing rise to 6.1%.

These recent developments demonstrate the company’s strong performance and strategic growth initiatives. However, despite the positive earnings results, analysts have not upgraded or downgraded the company’s stock. Looking ahead, Credit Acceptance Corporation is focused on maximizing intrinsic value and preparing for potential market challenges. The company’s future financial results are expected to rely heavily on the 2023-2024 loan cohorts, with EPS projected to reach $12.45 by Q1 2026.

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