February 24, 2006
By Facsimile (313) 568-6893 and U.S. Mail
Mark A. Metz Esq.
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
Re: Credit Acceptance Corporation, Inc.
Schedule TO-C, filed February 10, 2006
Schedule TO-I, filed February 10, 2006
Schedule TO-I/A, filed February 16, 2006
File No. 005-45225
Dear Mr. Metz:
We have the following comments on the above referenced
filings. Please understand that the purpose of our review process
is to assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filings.
We may have additional comments after reviewing your responses to our
comments. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or on any other
aspect of our review. Feel free to call us at the telephone number
listed at the end of this letter.
General
1. We note that the Company began a repurchase program on August
5, 1999 and has since repurchased more than 11 million shares of
its common stock, or approximately 24.4% of the shares that were
outstanding at the beginning of the repurchase program. We
further note that the percentage of the Company`s stock held by
officers and directors has increased over the period in which the
repurchases took place, and that following the tender offer for
approximately an additional 13.5% of CA`s outstanding stock, officers
and directors as a group may hold in excess of 75% of the Company`s
common stock. Tell us what consideration you have given to the
applicability of Rule 13e-3 to (i) the prior repurchase transactions
and (ii) the instant tender offer. See Exchange Act Release No. 17719
(April 13, 1981), Question 4.
2. To the extent the tender offer is viewed as a step in a going
private transaction, it appears that Mr. Smith and Mr. Vassalluzo
are obligated to file disclosure on Schedule 13D disclosing their
beneficial ownership of more than 5% of the Company`s stock, and
to amend the Schedule to report material increases or decreases in
their holdings. In this regard,
* Mr. Smith and Mr. Vassalluzo have filed the relevant disclosure
on Schedule 13G, which does appear to be the appropriate form, and
Mr. Smith`s most recent filing on February 14, 2006 appears to
accurately reflect his current holdings. Please advise us as
to why Messrs. Smith and Vassalluzo are still eligible to file on
Schedule 13G, or refile on the appropriate form.
* Mr. Foss and the Foss Trust filed on Schedule 13G, but the last
amendment appears to have been filed April 18, 2003, and it does
not accurately reflect Mr. Foss`s or the Trust`s current holdings.
Please refile on the appropriate form, and make the required
filings for all transactions in the stock of the company.
3. Tell us, with a view towards disclosure, the reasons that the
Company was delisted from Nasdaq. In this regard, explain what
impact the tender offer may have on the Company`s efforts to regain
its listing.
Company Website
4. We note the page which appears at the start of the investor
relations page of your website, at http://www.ir.creditacceptance.com.
The Private Securities Litigation Reform Act does not apply to statements
made in connection with a tender offer. See Sec. 21E(b)(2)(C) of the
Securities Exchange Act of 1934. Some of the information that appears
on your website following the page cited above pertains to the pending
tender offer. Further, you may not use the PSLRA page as a "gatekeeper"
to prevent security holders from viewing the information in that
section of your website. Please remove the page from your site.
Offer to Purchase
5. We note that Credit Acceptance Corporation`s common stock has
recently traded at a premium to the base price offered in this
modified Dutch auction tender offer. Revise the filing to
highlight this fact to security holders. Also highlight the risk that
security holders who tender into this offer may receive less than they
would have received in an open market sale.
6. Refer to the second paragraph on page iv. It is not clear to
us why the price determined by Credit Acceptance in accordance with
The terms of the offer should be synonymous with the minimum price.
The price determined in accordance with the terms of the offer would
be the lowest price at which the Company is able to purchase all
5,000,000 of the shares subject to the offer, which may or may not
be the minimum price. Revise your disclosure to correctly state the
effect of checking the box, and expand the disclosure to explain
that this feature may have the effect of decreasing the price at
which any shares will be purchased. Make similar changes to
Section 3, "Procedures for Tendering Shares" on page 12, and
Section 5, "Purchase of Shares and Payment of Purchase Price," on
page 17.
7. We note that approximately 25% of the shares that you expect to
purchase in the offer are held by officers and directors. If you
are aware of other persons who will tender, please include this
information and the reasons for their intended action in your
disclosure.
Summary Term Sheet, page 1
Once I have tendered shares in the tender offer, can I withdraw my
tender? page 4
8. We note the disclosure that shareholders may withdraw their
shares if you have not accepted shares pursuant to the offer before
April 10, 2006. It appears that April 7, 2006 is the fortieth business
day following the commencement of the offer, as contemplated by Rule
13e-4(f)(2)(ii). Please revise.
When will CA pay for the shares I tender? page 5
9. Please explain why you believe that five business days
constitutes "prompt payment" within the meaning of Rule 13e-4(f)(5)
and Rule 14e-1(c). See Section II. D. of Exchange Act Release 43069,
effective July 31, 2000.
Forward Looking Statements, page 7
10. We note your disclosure that you do not undertake, and
expressly disclaim any obligation to update or alter your forward
looking statements whether as a result of new information, future
events or otherwise, except as required by applicable law. This
disclosure is inconsistent with your obligation under Rules 13e-4(c)(3)
and 13e-4(e)(3) to amend the Schedule to reflect a material change in
the information previously disclosed. Please revise.
Purpose of the Tender Offer; Certain Effects of the Tender Offer;
Plans and Proposals, page 10
11. Revise the disclosure of the previous share repurchases to
include the per share price paid in each transaction.
Special Procedures for Holders of Option Shares, page 16
12. Tell us, with a view towards disclosure, whether the
conditional exercise of an option is contemplated by the agreement
governing the option grant, and whether there are any other
circumstances in which a conditional exercise would be permitted.
Withdrawal Rights, page 17
13. It is not clear how the last paragraph in this section
complies with Rule 13e-4(f)(5). It appears to state that the
depositary may hold the shares indefinitely in the event that CA
"is delayed in its purchase of shares or is unable to purchase shares
under the tender offer for any reason..." Please revise or advise.
Conditions of the Tender Offer, page 19
14. A tender offer may be conditioned on a variety of events and
circumstances, provided that they are not within the direct or
indirect control of the bidder, and are drafted with sufficient
specificity to allow for objective verification that the
conditions have been satisfied. With this in mind, revise the
following:
* Condition (1), which conditions the offer on whether any
"action" has been "threatened" by any person that "challenges ...or
relates in any manner to the tender offer;" and
* Condition (3), which conditions the offer on there having been
no "disruption" in the capital markets that might affect the
extension of credit by banks or lending institutions .
Available Information, page 24
15. Please revise to include the current address of the Securities
and Exchange Commission: 100 F Street NE, Washington DC 20549.
Letter of Transmittal
16. We note the requirement in subparagraph (d) that the signatory
covenant to CA that s/he "has read ....the terms of the tender
offer." Since CA is asking security holders to certify that they
have "read" the terms of the offer, CA`s request may be
interpreted as a waiver of CA liability. Please revise to delete the
requirement that security holders certify that they have "read" the
offer.
Closing Comments
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts relating to a company`s disclosure, they are responsible for
the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide, in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filings; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of the Division of Corporation Finance in our review of your filings
or in response to our comments on your filings.
As appropriate, please amend your documents in response to
these comments. Please furnish a cover letter with your amendment
that keys your responses to our comments and provides any
requested information. Detailed cover letters greatly facilitate our
review.
Please file your cover letter on EDGAR. Please understand
that we may have additional comments after reviewing your amendment
and responses to our comments. In addition, you are reminded that
depending upon your response to these comments, a supplement may
need to be sent to security holders.
Please direct any questions to me at (202) 551-3267. You
may also contact me via facsimile at (202) 772-9203.
Very truly yours,
Julia E. Griffith
Special Counsel
Office of Mergers and Acquisitions