UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): NOVEMBER 21, 2006
CREDIT ACCEPTANCE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Commission File Number 000-20202
MICHIGAN 38-1999511
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
25505 W. TWELVE MILE ROAD, SUITE 3000 48034-8339
SOUTHFIELD, MICHIGAN (Zip Code)
(Address of Principal Executive Offices)
(Registrant's telephone number, including area code): (248) 353-2700
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written Communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
The information set forth below under Item 2.03 is hereby incorporated by
reference into this Item 1.01.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On November 21, 2006, Credit Acceptance Corporation (the "Company") entered into
a $100.0 million asset-backed non-recourse secured financing. The parties to
this transaction are the Company, as servicer, Credit Acceptance Auto Dealer
Loan Trust 2006-2, as issuer, Credit Acceptance Funding LLC 2006-2, as seller,
Wachovia Capital Markets, LLC, as initial purchaser, Deutsche Bank Trust Company
Americas, as trust collateral agent and indenture trustee, Systems & Services
Technologies, Inc., as backup servicer, and Radian Asset Assurance Inc. and XL
Capital Assurance, Inc., as the insurers.
The terms and conditions of this transaction are set forth in the agreements
attached hereto as Exhibits 4(f)(78) through 4(f)(83), which agreements are
incorporated herein by reference. This transaction is also summarized in a press
release issued by the Company on November 21, 2006, which is attached hereto as
Exhibit 99(a) and is incorporated herein by reference.
The secured financing creates loans for which the Company's special purpose
trust created for the transaction is liable and which are secured by all the
assets of the trust and of another subsidiary created for the transaction. Such
loans are non-recourse to the Company, even though the trust, the subsidiary and
the Company are consolidated for financial reporting purposes. Except for the
Company's servicing fee and payments due to dealer-partners, the Company does
not receive, or have any rights in, any portion of such collections until the
trust's underlying indebtedness is paid in full, either through collections or
through a prepayment of the indebtedness. Thereafter, remaining collections
would be paid over to the subsidiary as the sole beneficiary of the trust where
they would be available to be distributed to the Company as the sole member of
subsidiary, or the Company may choose to cause the subsidiary to repurchase the
remaining dealer-partner advances from the trust and then dissolve, whereby the
Company would become the owner of such remaining collections. The Company might
also cause the subsidiary's beneficial interest in the trust to be sold and
financed under its credit facility with Variable Funding Capital Company LLC
described in the Company's Current Report on Form 8-K filed September 22, 2006.
The financing may be accelerated upon the occurrence of an "indenture event of
default." An "indenture event of default" includes: a default by the trust in
the payment of interest or principal when due; any breach of covenant or any
material breach of representation or warranty that is not cured within the
specified time following notice; the occurrence of certain bankruptcy or
insolvency events involving the trust or the subsidiary; a draw on one of the
financial insurance policies; the failure of collections on the transferred
assets to be more than a threshold percentage of projected collections for three
consecutive collection periods; a transfer by the subsidiary of its ownership of
the trust; the failure of the subsidiary to observe in any material respect any
of its limited purpose covenants after giving effect to notice and grace
periods; the failure of the trustee to have a valid and perfected first priority
security interest in the trust property if such failure has not been cured
within ten business days; and the cessation of any transaction document to be in
full force and effect.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
4(f)(78) Indenture dated November 21, 2006 between
Credit Acceptance Auto Dealer Loan Trust
2006-2 and Deutsche Bank Trust Company
Americas
4(f)(79) Sale and Servicing Agreement dated November
21, 2006 among the Company, Credit
Acceptance Auto Dealer Loan Trust 2006-2,
Credit Acceptance Funding LLC 2006-2,
Deutsche Bank Trust Company Americas, and
Systems & Services Technologies, Inc.
4(f)(80) Backup Servicing Agreement dated November
21, 2006 among the Company, Credit
Acceptance Funding LLC 2006-2, Credit
Acceptance Auto Dealer Loan Trust 2006-2,
Systems & Services Technologies, Inc.,
Radian Asset Assurance Inc., XL Capital
Assurance Inc. and Deutsche Bank Trust
Company Americas
4(f)(81) Amended and Restated Trust Agreement dated
November 21, 2006 between Credit Acceptance
Funding LLC 2006-2 and U.S. Bank Trust
National Association
4(f)(82) Contribution Agreement dated November 21,
2006 between the Company and Credit
Acceptance Funding LLC 2006-2
4(f)(83) Intercreditor Agreement dated November 21,
2006 among the Company, CAC Warehouse
Funding Corporation II, Credit Acceptance
Auto Dealer Loan Trust 2006-2, Credit
Acceptance Funding LLC 2006-2, Credit
Acceptance Auto Dealer Loan Trust 2006-1,
Credit Aceptance Funding LLC 2006-1,
Wachovia Capital Markets, LLC, as agent, The
Bank of New York (as successor-in-interest
to the corporate trust business of JPMorgan
Chase Bank, N.A.), as agent, Deutsche Bank
Trust Company Americas, as agent, and
Comerica Bank, as agent
99(a) Press Release dated November 21, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CREDIT ACCEPTANCE CORPORATION
(Registrant)
By: /s/ Douglas W. Busk
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Douglas W. Busk
Treasurer
November 27, 2006
INDEX OF EXHIBITS
EXHIBIT
NO. DESCRIPTION
4(f)(78) Indenture dated November 21, 2006 between Credit Acceptance
Auto Dealer Loan Trust 2006-2 and Deutsche Bank Trust Company
Americas
4(f)(79) Sale and Servicing Agreement dated November 21, 2006 among the
Company, Credit Acceptance Auto Dealer Loan Trust 2006-2,
Credit Acceptance Funding LLC 2006-2, Deutsche Bank Trust
Company Americas, N.A., and Systems & Services Technologies,
Inc.
4(f)(80) Backup Servicing Agreement dated November 21, 2006 among the
Company, Credit Acceptance Funding LLC 2006-2, Credit
Acceptance Auto Dealer Loan Trust 2006-2, Systems & Services
Technologies, Inc., Radian Asset Assurance Inc., XL Capital
Assurance Inc. and Deutsche Bank Trust Company Americas
4(f)(81) Amended and Restated Trust Agreement dated November 21, 2006
between Credit Acceptance Funding LLC 2006-2 and U.S. Bank
Trust National Association
4(f)(82) Contribution Agreement dated November 21, 2006 between the
Company and Credit Acceptance Funding LLC 2006-2
4(f)(83) Intercreditor Agreement dated November 21, 2006 among
the Company, CAC Warehouse Funding Corporation II,
Credit Acceptance Auto Dealer Loan Trust 2006-2, Credit
Acceptance Funding LLC 2006-2, Credit Acceptance Auto
Dealer Loan Trust 2006-1, Credit Acceptance Funding LLC
2006-1, Wachovia Capital Markets, LLC, as agent, The
Bank of New York (as successor-in-interest to the
corporate trust business of JPMorgan Chase Bank, N.A.),
as agent, Deutsche Bank Trust Company Americas, as
agent, and Comerica Bank, as agent
99(a) Press Release dated November 21, 2006