Despite tough conditions in the loan market, Bank of America has stayed with Credit Acceptance Corp. to replace a $115 million maturing credit facility with an upsized $120 million loan. Douglas Busk, cfo, aware of pullbacks in the loan market, said "B of A [is] trying to better allocate resources to serve relationships." Busk added that, "Credit Acceptance has done five securitizations in the past and is likely to pursue them in the future. One of the things that improves relationships is other business." Busk said securitizations are typically used to pay down the debt on the credit facility.
Southfield, Mich.-based Credit Acceptance provides funding, receivables management, collection, sales training and related products and services to automobile dealers selling vehicles to customers with limited access to traditional sources of consumer credit.
Comerica Bank, a local bank with which Credit Acceptance has had a long-standing association, was also reselected as co-lead and administration agent. Expertise in the automotive financing sector lay behind the original reason to go with B of A, noted Busk. The terms of the new deal are similar to the old credit, with pricing set either at 1.4% over the Eurocurrency rate or at the bank's prime rate, with the company holding the option to decide. The previous pricing was LIBOR plus 2%. The one-year loan is secured by a lien on most of the company's assets. The covenants on the new deal are simplified, noted Busk, declining to comment further.