SOUTHFIELD, Mich. -

Credit Acceptance Corp. commenced a tender offer to purchase up to 915,750 shares of its outstanding common stock. The company pegged the price per share at $125.58

“We anticipate that we will obtain all of the funds necessary to purchase shares tendered in the tender offer, and to pay related fees and expenses, by borrowing under our revolving secured line of credit facility and/or one or more of our revolving secured warehouse facilities,” Credit Acceptance officials said last week when they made the announcement. “The tender offer is not conditioned upon the receipt of financing.

“We have evaluated our operations, strategy and expectations for the future and believe that the tender offer is a prudent use of our financial resources given our business profile, assets and the current market price for our shares,” the continued.

As of last Wednesday, Credit Acceptance indicated it had $489.7 million in unused and available capacity on its revolving secured line of credit facility and its revolving secured warehouse facilities.

“We believe that the tender offer represents a mechanism to provide all shareholders with the opportunity to tender all or a portion of their shares and, thereby, receive a return of the company’s capital if they so elect,” company officials said. “This format of repurchase also provides a method for shareholders not participating to increase their relative percentage interest in Credit Acceptance and our future operations at no additional cost.

“As a result, we believe that investing in our own shares in this manner is an attractive use of capital and an efficient means to provide value to shareholders,” they continued. “The tender offer also provides liquidity to shareholders (particularly those with large shareholdings) by providing them the opportunity to sell all or a portion of their shares at a price of $125.58 per share without potential disruption to the share price and the usual transaction costs associated with market sales.”

Credit Acceptance mentioned the tender offer will expire at 5 p.m. EST on June 16 unless extended by the company. 

“Tenders of shares must be made on or prior to the expiration of the tender offer and shares may be withdrawn at any time on or prior to the expiration of the tender offer,” Credit Acceptance officials said. “Our obligation to purchase shares in the tender offer is not conditioned upon any minimum number of shares being tendered.

“The tender offer is, however, subject to the conditions set forth in the offer to purchase and related letter of transmittal documents being sent to shareholders,” they added.

Under the tender offer, shareholders of Credit Acceptance common stock will be invited to choose how many shares they are willing to sell to the company at $ 125.58 per share.

If more than the maximum number of shares sought is tendered, the company noted that tendering shareholders owning fewer than 100 shares, or “odd lot” holders, will have their shares purchased without proration and all other tendered shares will be purchased on a pro rata basis, subject to the conditional tender provisions described in the offer to purchase.

The company went on to state that shareholders whose shares are purchased in the tender offer will be paid the purchase price net in cash, without interest, promptly after the expiration of the tender offer.

Shareholders whose shares are not purchased in the tender offer will have their shares returned, free of charge, promptly after the expiration of the tender offer, according to the company.

Credit Acceptance board chairman Donald Foss made a non-binding intention to tender 4.4 million shares in the tender offer.

Another company director, Glenda Flanagan, indicated that she may tender up to 28,000 shares in the tender offer.

“None of our other directors or officers have indicated their intent to tender shares in the tender offer,” Credit Acceptance officials said. “If the intention of our directors and officers changes materially, we will disclose the change in intention prior to the expiration of the tender offer.”

As of May 1, Credit Acceptance had 22,509,684 shares outstanding. The last reported sale price of Credit Acceptance’s common stock on the Nasdaq Global Select Market on May 15, which was the last trading day prior to the announcing of the offer, was $125.58 per share.

“Neither Credit Acceptance nor its board of directors is making any recommendation to any shareholder as to whether to tender or refrain from tendering their shares,” company officials said.

“Shareholders should carefully evaluate all information in the offer to purchase and the related letter of transmittal, should consult with their own financial and tax advisors, and should make their own decisions about whether to tender shares, and, if so, how many shares to tender,” they went on to say.