DETROIT -- Credit Acceptance Corp. shares rose $1.21 to $48.50 today after the company said it initiated a tender offer to buy back up to 4 million shares of its stock at $50 a share.
Credit Acceptance, based in suburban Detroit, provides credit to auto buyers with troubled credit histories.
The company said in a press release before markets opened that the purpose of the tender offer was to distribute “excess capital to shareholders.”
Don Foss, the chairman of the board and the majority shareholder, likely will be the chief beneficiary.
The company said that Foss has “indicated a non-binding intention to tender 15.4 million shares,” and that the trustee of trusts created by Foss has “indicated a non-biding intention to tender four million shares.”
The company said that if the final number of shares tendered by shareholders exceeds four million, “each shareholder will receive their pro rata portion of the amount distributed.”
The company said that since its last distribution to shareholders in 2006, it has generated more than $300 million net income and has recently completed several long-term debt financings that will stabilize future operations. After the distribution, the company said it will have $190 million in unused and available revolving lines of credit.
Since 1999, the company has distributed $399.2 million to shareholders through stock purchases.