GM Financial (ticker: ACF, exchange: New York Stock Exchange (.N))
News Release -
AmeriCredit Reaches Agreement Regarding Securitization Triggers, Will Move Future Securitizations to On-balance Sheet Financing Structure, and Plans to Add Three Independent Directors
FORT WORTH, Texas--(BUSINESS WIRE)--Sept. 16, 2002--AMERICREDIT
CORP. (NYSE:ACF) announced today it has reached an agreement with
Financial Security Assurance (FSA), the Company's bond insurance
guarantor, to raise delinquency trigger levels in its securitizations.
The agreement with FSA provides for an increase in delinquency
triggers to a level in excess of the Company's current forecast of
pool performance for the six monthly reporting periods from September
2002 through February 2003. This reduces the likelihood of an increase
in credit enhancement requirements due to delinquency triggers for all
of its outstanding securitizations.
In consideration for raising delinquency triggers, FSA will
receive warrants to purchase 1,287,691 shares of common stock, which
are exercisable for five years at a 20% premium above market plus a 2.5 basis point increase in insurance fees.
AmeriCredit has also announced it will structure its future
securitization transactions as secured financings, which do not
require the recognition of a gain-on-sale.
Accordingly, auto receivables securitized in the future will
remain on the Company's balance sheet. Net earnings on its receivables
will be recognized over the life of the receivables as finance charge
and fee income, less related funding costs and a provision for losses.
The change in securitization structure will have no impact on the
Company's funding procedures, business model or cash flow.
"Middle market automobile finance can be a complex business,"
said AmeriCredit CEO Mike
Barrington, "and some of our stakeholders have told us they don't
fully understand the accounting for our business due to the use of
gain-on-sale. So we've made the decision to move to on-balance sheet
securitizations to make it clearer for all our stakeholders to
understand our business and assess our financial results over time."
Management has indicated it plans to grow its managed loan
portfolio approximately 15% annually over time. Due to the change
in how future securitization transactions will be structured, the
Company's earnings guidance is being revised. The new projections are
3 mos. 3 mos. 12 mos. 12 mos.
ended ended ended ended
9/30/02 12/31/02 6/30/03 12/31/03
($ millions) ---------- ---------- ---------- ----------
Net income $55 - 60 $(5) - (10) $80 - 90 $160 - 170
"AmeriCredit's business model is not changing. What is changing is
the way we structure our securitizations, and therefore how we
recognize earnings in accordance with Generally Accepted Accounting
Principles. This change is consistent with our practice of providing
clear and complete information to all our stakeholders," Barrington
Finally, AmeriCredit plans to add three independent directors to
its Board. The Board will identify and recruit external candidates who
will enhance the Company's independent governance and oversight.
AmeriCredit will host a conference call for analysts and investors
at 8:15 A.M. Eastern Daylight Time on Tuesday, September 17, 2002. For
a live Internet broadcast of this conference call, please go to the
Company's Web site. For those who cannot listen to the live broadcast,
a replay will be available shortly after the call.
AmeriCredit Corp. (NYSE:ACF) is the largest independent
middle-market auto finance Company in North America. Using its branch
network and strategic alliances with auto groups and banks, the
Company purchases installment contracts made by auto dealers to
consumers who are typically unable to obtain financing from
traditional sources. AmeriCredit has more than one million customers
throughout the United States and Canada and nearly $15 billion in
managed auto receivables. The Company was founded in 1992 and is
headquartered in Fort Worth, Texas. For more information, visit
Except for the historical information contained herein, the
matters discussed in this news release include forward-looking
statements that involve risks and uncertainties detailed from time to
time in the Company's filings and reports with the Securities and
Exchange Commission including the Company's annual report on Form 10-K
for the period ended June 30, 2001. Such risks include - but are not
limited to - deteriorating economic environment, adverse portfolio
performance, reliance on capital markets, fluctuating interest rates,
increased competition, regulatory changes and tightening labor
markets. These forward-looking statements are based on the beliefs of
the Company's management as well as assumptions made by and
information currently available to Company management. Actual events
or results may differ materially.
||AmeriCredit Corp., Fort Worth
||Kim Pulliam, 817/302-7009
||Susan Sheffield, 817/302-7355
||Jason Landkamer, 817/302-7811
||John Hoffmann, 817/302-7627