Asset Acceptance to buy up to 1,858,000 shares in Dutch auction tender offer

By Lisa Kerner

Charlotte, N.C., May 9 - Asset Acceptance Capital Corp. began its modified Dutch auction tender offer as part of a planned recapitalization to return $150 million to its shareholders.

The company plans to repurchase up to 1,858,000 shares, plus an additional 2% of shares outstanding, priced between $18.25 and $20.00 per share, for a total of $75 million, according to a company news release.

A maximum of $37.2 million will be used to repurchase shares at the high end of the per share price range.

The tender offer is scheduled to expire at 5 p.m. ET on June 7, unless extended by the company.

Asset Acceptance will also purchase shares from AAC Quad-C Investors LLC, chief executive officer Brad Bradley and chief financial officer Mark Redman, who collectively own 50.4% of the company's stock.

The balance of the $150 million return of capital to shareholders will be paid in the form of a special one-time cash dividend shortly following the completed tender offer.

Proceeds from a new $150 million term loan being arranged by J.P. Morgan Securities Inc. as part of a new credit facility will be used to fund the recapitalization plan and tender offer.

"We believe that the recapitalization, including the tender offer, is a prudent use of our financial resources given our business profile, assets and current market price, and that purchasing our own shares is an attractive use of capital and an efficient means to provide value to our shareholders," Bradley said in the release.

"The tender offer will provide those shareholders who might prefer a less leveraged balance sheet with a selling opportunity without the usual transaction costs associated with open market transactions. Our plan also allows shareholders who desire to continue their investment to retain their shares and, after completion of our return of capital plan, potentially benefit from (1) increased equity return opportunities available due to our higher leverage, (2) the expected significant special cash dividend described earlier, and (3) an increased percentage ownership in AACC."

The Warren, Mich.-based purchaser and collector of charged-off consumer debt first announced its planned recapitalization on April 24.

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