AmeriCredit issues shares to Fairholme in exchange for $108 million 8½% notes, appoints new director

By Jennifer Chiou

New York, Dec. 12 - AmeriCredit Corp. said it issued 15.1 million common shares to Fairholme Funds, Inc. in exchange for $108 million of AmeriCredit's 8½% senior notes due 2015.

The company paid $840 per $1,000 principal amount of the notes tendered in the exchange.

The company announced plans for the exchange on Nov. 24.

AmeriCredit also said that it appointed Bruce R. Berkowitz to its board of directors, making him the 10th director on the board. Berkowitz is the president of Fairholme and is also a member of its board of directors.

The par value of the notes was based on the lower of 120% of the 10-day average closing price of AmeriCredit's common stock just before close of the exchange, or $6.02 per share.

As part of the agreement, Fairholme will purchase $123 million of notes rated below AAA in AmeriCredit's next asset-backed securities offering.

As already reported, the company also will enter into a two-year standstill agreement that limits its ownership of AmeriCredit's common stock together with ownership of AmeriCredit's common stock by certain accounts advised by Fairholme Capital Management, LLC and by affiliates to 28.9%.

As previously noted, Fairholme and other accounts managed by affiliates of Fairholme Capital Management, LLC beneficially own 23 million shares, or 19.8%, of outstanding AmeriCredit common shares.

The issue of additional shares to Fairholme required approval of AmeriCredit's shareholders, according to the shareholder approval policy of the New York Stock Exchange. However, the audit committee of the board of directors of AmeriCredit determined the delay in securing shareholder approval would impair the company's ability to complete a securitization in a timely fashion, which, in turn would put the financial viability of the company at substantial risk, according to a prior press release.

Accordingly, under an exception provided in the exchange's policy, the audit committee approved the company's omission to seek the shareholder approval that would otherwise have been required under that policy. The exchange has accepted the company's application of the exception.

AmeriCredit is a Fort Worth, Texas-based auto finance company.

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