CREDIT ACCEPTANCE CORPORATION Item 1.01 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.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
OnJune 16, 2022 ,Credit Acceptance Corporation (the "Company", "Credit Acceptance", "we", "our", or "us") entered into a$350.0 million asset-backed non-recourse secured financing (the "Financing"). Pursuant to this transaction, we contributed loans having a value of approximately$437.6 million to a wholly-owned special purpose entity,Credit Acceptance Funding LLC 2022-1 ("Funding 2022-1"), which transferred the loans to a trust, which issued four classes of notes: Note Class Amount Average Life Price Interest Rate A$ 184,850,000 2.51 years 99.97752 % 4.60 % B$ 65,310,000 3.19 years 99.99521 % 4.95 % C$ 78,950,000 3.64 years 99.99721 % 5.70 % D$ 20,890,000 3.83 years 99.99104 % 6.63 % The Financing will: •have an expected annualized cost of approximately 5.4% including the initial purchasers' fees and other costs; •revolve for 24 months after which it will amortize based upon the cash flows on the contributed loans; and •be used by us to repay outstanding indebtedness and for general corporate purposes. We will receive 4.0% of the cash flows related to the underlying consumer loans to cover servicing expenses. The remaining 96.0%, less amounts due to dealers 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. The Financing is structured so as not to affect our contractual relationships with our dealers and to preserve the dealers' rights to future payments of dealer holdback. The notes have not been and will not be registered under the Securities Act of 1933 and may not be offered or sold inthe United States absent registration or an applicable exemption from registration requirements. This Current Report on Form 8-K does not and will not constitute an offer to sell or the solicitation of an offer to buy the notes. The parties to this transaction are the Company, as servicer,Credit Acceptance Auto Loan Trust 2022-1, as issuer (the "Trust"), Funding 2022-1, as seller, andComputershare Trust Company, N.A. , as trust collateral agent, indenture trustee and backup servicer. The Financing creates loans for which the Trust is liable and which are secured by all the assets of the Trust. Such loans are non-recourse to the Company, even though the Trust, Funding 2022-1 and the Company are consolidated for financial reporting purposes. Except for the servicing fee and payments due to dealers, if the Financing is amortizing, the Company does not have any rights in any portion of such collections until all outstanding principal, accrued and unpaid interest, fees and other related costs have been paid in full. If the Financing is not amortizing, Funding 2022-1 may be entitled to retain a portion of such collections provided that the borrowing base requirements of the Financing are satisfied. However, in its capacity as servicer of the loans, the Company does have a limited right to exercise a "clean-up call" option to purchase loans from Funding 2022-1 and/or the Trust under certain specified circumstances. Alternatively, when the Trust's underlying indebtedness is paid in full, either through collections or through a prepayment of the indebtedness, the Trust is to pay any remaining collections over to Funding 2022-1 as the sole beneficiary of the Trust. The collections will then be available to be distributed to the Company as the sole member of Funding 2022-1. -------------------------------------------------------------------------------- The Financing may be accelerated upon the occurrence of an "indenture event of default." An "indenture event of default" includes: a default by the Trust in the payment of interest or principal when due; any breach of covenant or any material breach of representation or warranty that is not cured within the specified time following notice; the occurrence of certain bankruptcy or insolvency events involving the Trust or Funding 2022-1; the failure of cumulative collections on the transferred assets to be more than a threshold percentage of cumulative projected collections for three consecutive collection periods; a transfer by Funding 2022-1 of its ownership of the Trust (other than as permitted by the transaction documents); the failure of Funding 2022-1 to observe in any material respect any of its limited purpose covenants after giving effect to notice and grace periods; the failure of the indenture trustee to have a valid and perfected first priority security interest in a material portion of the Trust's property if such failure has not been cured within ten business days; the Issuer becoming an investment company within the meaning of the Investment Company Act of 1940; and the cessation of any transaction document to be in full force and effect. The terms and conditions of this transaction are set forth in the agreements attached hereto as Exhibits 4.94 through 4.99, which agreements are incorporated herein by reference. OnJune 16, 2022 , we entered into the Third Amendment to the Amended and Restated Loan and Security Agreement, dated as ofJune 16, 2022 , among the Company, CAC Warehouse Funding LLC IV, Bank of Montreal,BMO Capital Markets Corp. andWells Fargo Bank, National Association . The amendment extends the date on which our$300.0 million revolving secured warehouse facility will cease to revolve fromNovember 17, 2023 toMay 20, 2025 . There were no other material changes to the terms of the facility. As ofJune 16, 2022 , we did not have a balance outstanding under the revolving secured warehouse facility. The terms and conditions of this transaction are set forth in the agreement attached hereto as Exhibit 4.100 to this Form 8-K and incorporated herein by reference. OnJune 22, 2022 , we entered into the Ninth Amendment to the Sixth Amended and Restated Credit Agreement and Extension Agreement, dated as ofJune 22, 2022 , among the Company,Comerica Bank and the other banks signatory thereto (collectively, the "Banks") andComerica Bank as administrative agent for the Banks. The amendment extends the date on which the revolving secured line of credit facility will cease to revolve fromJune 22, 2024 toJune 22, 2025 . Prior to this amendment, the amount of the facility was set to decrease by$35.0 million onJune 22, 2022 , however this amendment increased the amount of the facility by$10.0 million resulting in a net decrease of$25.0 million , from$435.0 million to$410.0 million . As previously reported, the amount of the facility will continue to further decrease by$25.0 million onJune 22, 2023 .
Additionally, this amendment removed the covenant that required us to maintain
consolidated net income of not less than
As ofJune 22, 2022 we had$192.5 million outstanding under the revolving secured line of credit facility. The terms and conditions of this transaction are set forth in the agreement attached hereto as Exhibit 4.101 to this Form 8-K and incorporated herein by reference.
Item 8.01 Other Events.
OnJune 16, 2022 andJune 22, 2022 , we issued press releases regarding these transactions. The press releases are attached as Exhibits 99.1 and 99.2 to this Form 8-K and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
4.94 Indenture dated as of
Trust 2022-1 and Computershare Trust Company, N.A.
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4.95 Sale and Servicing Agreement dated as of
Credit Acceptance Auto Loan Trust 2022-1, Credit
2022-1, and Computershare Trust Company, N.A. 4.96 Backup Servicing Agreement dated as of
Credit Acceptance Funding LLC 2022-1, Credit
2022-1, and Computershare Trust Company, N.A. 4.97 Amended and Restated Trust Agreement dated as of
Acceptance Funding LLC 2022-1 andU.S. Bank Trust
National Association.
4.98 Sale and Contribution Agreement dated as of
and Credit Acceptance Funding LLC 2022-1.
4.99 Amended and Restated Intercreditor Agreement dated
Company, CAC Warehouse Funding Corporation II, CAC Warehouse Funding LLC IV,
CAC Warehouse Funding LLC V, CAC Warehouse Funding LLC VI,
Funding LLC VIII, Credit Acceptance Funding LLC 2022-1,
Funding LLC 2021-4, Credit Acceptance Funding LLC 2021-3,
Funding LLC 2021-2, Credit Acceptance Funding LLC 2021-1,
Funding LLC 2020-3, Credit Acceptance Funding LLC 2020-2,
Funding LLC 2020-1, Credit Acceptance Funding LLC 2019-3,
Funding LLC 2019-2, Credit Acceptance Auto Loan Trust 2022-1, Credit
Acceptance Auto Loan Trust 2021-4,Credit Acceptance
Credit Acceptance Auto Loan Trust 2021-2, Credit
2020-3, Credit Acceptance Auto Loan Trust 2020-2, Credit Acceptance Auto Loan
Trust 2020-1, Credit Acceptance Auto Loan Trust 2019-3,
Company, N.A. , as trustee,Fifth Third Bank , National
Association, Wells Fargo
Bank, National Association , as agent,Flagstar Bank ,
FSB, as agent, Citizens
Bank, N.A ., as agent andComerica Bank , as agent.
4.1 00 Third Amendment to the Amended and Restated Loan and Security Agreement dated
as of June 16, 2022 , among the Company, CAC Warehouse Funding LLC IV, Bank of
Montreal ,BMO Capital Markets Corp. and Wells Fargo
Bank, National
Association.
4.101 Ninth Amendment to the Sixth Amended and Restated Credit Agreement and
Extension Agreement dated as of June 22, 2022 among
the Company,
and the other banks signatory thereto and Comerica Bank, as administrative
agent for the banks.
99.1 Press Release dated June 16, 2022 .
99.2 Press Release dated June 22, 2022 .
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded
within the Inline XBRL document.
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