AmeriCredit to issue shares to Fairholme in exchange for 8½% notes

By Susanna Moon

Chicago, Nov. 24 - AmeriCredit Corp. said will issue 15.1 million common shares to Fairholme Funds, Inc. in exchange for AmeriCredit's 8½% senior notes due 2015 at $840 per $1000 principal amount of the notes.

The par value of the notes will be 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, expected in November.

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%.

Fairholme will be entitled to one seat on the company's board of directors.

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 requires 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 has 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 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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