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Asset Acceptance Capital Corp. has a market cap of $173.9 million; its shares were traded at around $5.83 with a P/E ratio of 33.4 and P/S ratio of 1. AACC is in the portfolios of David Nierenberg of D3 Family of Funds.
Highlight of Business Operations: We have been purchasing and collecting charged-off accounts receivable portfolios (“paper”) from consumer credit originators since the formation of our predecessor company in 1962. Charged-off receivables are the unpaid obligations of individuals to credit originators, such as credit card issuers including private label card issuers, consumer finance companies, telecommunications and utility providers. Since these receivables are delinquent or past due, we purchase them at a substantial discount to face value. Since January 1, 2000, we purchased 1,193 consumer debt portfolios, with an original charged-off face value of $43.9 billion for an aggregate purchase price of $1.1 billion, or 2.54% of face value, net of buybacks. We purchase and collect charged-off consumer receivable portfolios for our own account as we believe this affords us the best opportunity to use long-term strategies to maximize our profits.
As part of our strategy to shed underperforming assets and to become more efficient, in July, we announced our commitment to exit the healthcare accounts receivable purchase and collection activities conducted by our Premium Asset Recovery Corporation (“PARC”) subsidiary. In connection with that action, we sold substantially all of our healthcare receivables to a third party for $1.0 million and recognized a gain on the sale of $0.5 million.
In October, we announced our plan to close our Chicago, Illinois collections office in 2010. We expect to incur approximately $1.1 million in restructuring charges related to this action. Restructuring charges include employee termination benefits of approximately $0.5 million, contract termination costs of approximately $0.4 million for the remaining lease payments, write-off of furniture and equipment of approximately $0.1 million and other exit costs of approximately $0.1 million. The termination benefits, contract termination costs and other exit costs will require the outlay of cash of approximately $1.0 million, while the write-off of furniture and equipment of $0.1 million represents non-cash charges. The charges for these actions will be recognized in the fourth quarter of 2010.
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