Credit Acceptance Corp. to buy back 4 million share in tender offer; extends credit facility

Credit Acceptance to buy back 4 million shares

SOUTHFIELD, Mich. — Auto loan provider Credit Acceptance Corp. said Friday it has launched a tender offer to buy back up to four million of its outstanding shares, a move that will boost its per-share earnings.

The company is offering to buy the shares at $50 each, a 6 percent premium over Thursday’s closing price of $47.29.

“The primary purpose of this proposed transaction is to distribute excess capital to shareholders,” Credit Acceptance said in a release. The company does not distribute dividends.

Company Chairman Donald Foss, the majority shareholder, said he plans to tender 15.4 million shares, and trusts created by Foss will tender 4 million shares. Three other officers also plan to tender shares, the company said. Shareholders owning less than 100 shares of the company would have all of their shares bought back in the deal, and others will be repurchased on a pro-rated basis.

The offer expires July 19 at 5 p.m. As of May 31, Credit Acceptance had more than 31 million shares outstanding.

Credit Acceptance also said it has extended its $325 million secured warehouse facility to June 15, 2013 from Aug. 23, 2010 at a lower interest rate. This loan and the company’s $150 million revolving line of credit will be used to finance the tender offer.

In morning trading, Credit Acceptance Corp. shares rose $1.27, or 2.7 percent, to $48.56.