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Asset Acceptance Capital Corp. Secures Amended Credit Facility

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  Published in Business and Finance on Friday, June 4th 2010 at 12:45 GMT by Market Wire
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WARREN, Mich.--([ BUSINESS WIRE ])--Asset Acceptance Capital Corp. (NASDAQ: [ AACC ]), a leading purchaser and collector of charged-off consumer debt, today announced that it has reached an agreement with its lenders on an amendment to its existing senior secured credit facility. The updated revolving credit facility expands the Companya™s borrowing capacity from approximately $37 million as of March 31, 2010 to $65.9 million based on the add-back of certain charges.

"We continue to maintain an open dialogue with the FTC since receiving their communication in early April. We will continue to work diligently to resolve this matter with the FTC and hope to provide an update in the next several quarters."

[ Rion Needs ], President and Chief Executive Officer, commented, aWorking collaboratively with our lenders, we have amended our credit facility to loosen its most restrictive covenants. The amended credit facility nearly doubles our capacity, enabling us to meet our purchasing goals for 2010 as pricing remains attractive, as well as execute against our long-term growth strategy. We appreciate the continuing support of our lending group which we believe is an endorsement of the company's strength and growth strategy.a

The amendment, entered into on Friday, May 28, 2010, modifies the terms and certain other provisions of the facility. The agreement amends certain definitions in the Credit Agreement to provide the Company with relief on the financial covenants with respect to fourth quarter 2009 non-cash impairment charges on purchased receivables and potential charges and losses, including defense costs resulting from the Federal Trade Commissiona™s investigation of the Companya™s debt collection-related practices. The amendment also increases the rate of interest the Company pays on certain types of borrowings under the Credit Agreement at certain leverage ratios. These conditions, as well as other material provisions of the amended credit facility, are described in the company's 8-K filing that will be filed later in the day with the Securities and Exchange Commission.

As previously disclosed, on April 6, 2010, the FTC delivered a letter to the Company which stated its view that the Company may have engaged in certain violations of the FDCPA, FTC Act and FCRA laws, offered it an opportunity to resolve the matter through consent negotiations, and forwarded a proposed consent decree. The amendment adds back to Adjusted EBITDA and Consolidated Net Worth for purposes of financial covenant calculations the aggregate amount of the Companya™s losses and charges from the FTC investigation mentioned above, capped at $7.0 million in total for purposes of the credit agreement. The Company is currently unable to estimate the potential liability for this matter.

Needs commented, aWe continue to maintain an open dialogue with the FTC since receiving their communication in early April. We will continue to work diligently to resolve this matter with the FTC and hope to provide an update in the next several quarters.a

About Asset Acceptance Capital Corp.

For more than [ 45 years ], Asset Acceptance has provided credit originators, such as credit card issuers, consumer finance companies, retail merchants, utilities and others an efficient alternative in recovering defaulted consumer debt. For more information, please visit [ www.AssetAcceptance.com ].

Asset Acceptance Capital Corp. Safe Harbor Statement

This press release contains certain statements, including the Company's plans and expectations regarding its operating strategies, charged-off receivables and costs, which are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include reference to the Companya™s presentations and webcasts. These forward-looking statements reflect the Company's views, expectations and beliefs at the time such statements were made with respect to such matters, as well as the Company's future plans, objectives, events, portfolio purchases and pricing, collections and financial results such as revenues, expenses, income, earnings per share, capital expenditures, operating margins, financial position, expected results of operations and other financial items. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (aRisk Factorsa) that make the timing, extent, likelihood and degree of occurrence of these matters difficult to predict. Words such as aanticipates,a abelieves,a aestimates,a aexpects,a aintends,a ashould,a acould,a awill,a variations of such words and similar expressions are intended to identify forward-looking statements. There are a number of factors, many of which are beyond the Company's control, which could cause actual results and outcomes to differ materially from those described in the forward-looking statements. Risk Factors include, among others: ability to purchase charged-off consumer receivables at appropriate prices, ability to continue to acquire charged-off receivables in sufficient amounts to operate efficiently and profitably, employee turnover, ability to compete in the marketplace and acquiring charged-off receivables in industries that the Company has little or no experience. These Risk Factors also include, among others, the Risk Factors discussed under aItem 1A Risk Factorsa in the Companya™s most recently filed Annual Report on Form 10-K and in other SEC filings, in each case under a section titled aRisk Factorsa or similar headings and those discussions regarding risk factors as well as the discussion of forward-looking statements in such sections are incorporated herein by reference. Other Risk Factors exist, and new Risk Factors emerge from time to time that may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Furthermore, the Company expressly disclaims any obligation to update, amend or clarify forward-looking statements.