Credit Acceptance Corp. is issuing $400 million in senior notes — due in 2024 — to fund its concurrent cash tender offer on $300 million of outstanding senior notes due in 2021, the company announced yesterday. The senior notes have an interest rate of 5.125% and 6.125%, respectively, according to a filing with the Securities and Exchange Commission. Credit Acceptance has a market capitalization of $8.11 billion.
Read more: Credit Acceptance Issues $400M of Senior Notes [March 2019]
CAC will then use the proceeds from the 2024 notes toward the redemption of any outstanding notes due in 2021 after completion of the tender offer, followed by the redemption of $250 million worth of senior notes due in 2023. Any net proceeds thereafter will be put toward short-term investments or used to repay borrowings under the subprime lender’s revolving credit facility.
The $300 million offering due in 2021 was initiated in January 2014, and the $250 million offering due in 2023 was initiated in March 2015 and had a 7.375% interest rate, according to SEC filings.
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