SOUTHFIELD, Mich. — Credit Acceptance Corp. recently announced the completion of a $75 million revolving secured warehouse facility with an institutional investor.

The company noted that under this facility it will contribute loans to a wholly-owned special purpose entity (SPE), and the SPE may borrow up to the lesser of 80 percent of the net book value of the contributed loans or $75 million during the facility's revolving period.

Also of note, the facility will cease to revolve on Feb. 19, 2014, according to management.

“If the facility is not renewed prior to this date, and we (the company) and the SPE are in compliance with the terms and conditions of the agreement, any amounts outstanding will be repaid over time as the collections on the loans securing the facility are received,” officials further stressed.

Moreover, the company initially contributed loans having a net book value of $54 million to the SPE, and the SPE borrowed $41 million under the facility. The proceeds of the financing will be used by the company to repay outstanding indebtedness.

As for borrowings, those made under the facility will bear interest at a rate equal to LIBOR plus 275 basis points with the LIBOR rate limited to a maximum of 5.50 percent by an interest rate cap agreement.

The company will receive a servicing fee of 6.0 percent of the cash flows related to the underlying consumer loans.

The remaining 94 percent — less amounts due to dealer-partners 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 company stated.

“Using a unique financing structure, our contractual relationships with our dealer-partners remain unaffected with the dealer-partners' rights to future payments of dealer holdback preserved,” management concluded.