Credit Acceptance Corp. next auto-loan securitization launched this week is its third publicly rated notes offering of the year.
But deal is also the first since two substantial announcements from the Michigan-based subprime auto lender last week.
On April 29, chief executive officer Brett Roberts announced he was retiring effective Monday after 30 years at the company and 19 as its CEO. He is being succeeded by former chief financial officer Kenneth S. Booth.
Meanwhile, the company announced it had, in principal, reached a $27 million settlement in a lawsuit filed last August by Massachusetts attorney general Maura Healey – a suit that CAC itself countered with its own decision to sue Healey on the constitutionality of the state's actions against the company.
The announcement was included in the release of the company's first-quarter earnings report, in which the company noted a contingent loss of $27.2 million from the settlement that reduced its quarterly net income to $20.9 million.
Healey
The lawsuit was among the reasons that Neuberger Berman analyst Steve Eisman decided to short the stock of the company, in the belief it would be under substantial legal and regulatory pressure from stronger consumer protection enforcement by the Biden administration in 2021.
Despite the Masschusetts settlement, Credit Acceptance's legal entanglements remain substantial. The company remains under investigation by the Consumer Financial Protection Bureau, which sent out the latest among multiple civil investigation demand letters it has delivered to CAC since April 2019.
The company is also being probed by attorneys general in Maryland, New York, and Mississippi for its lending and collection practices, and last October was served a shareholder class action complaint alleging falst and/or misleading statements or omissions regarding the company and its business, noted S&P Global Ratings in a presale report issued this week.
The forthcoming Credit Acceptance Auto Loan Trust (CAALT) 2021-3 securitization is a $350 million bond sale that could be upsized to $450 million, depending on market conditions.
The deal includes a Class A tranche of notes sized at either $257.4 million or $330.95 million with preliminary triple-A ratings from S&P Global, Kroll Bond Rating Agency and Moody's Investors Service.
