CPS Enters Material Agreement, New Financial Obligation on Jan 24

TL;DR

**CPS just took on new debt or financing, watch for details on terms and impact on earnings.**

AI Summary

On January 24, 2024, Consumer Portfolio Services, Inc. (CPS) filed an 8-K to report entering into a material definitive agreement and creating a direct financial obligation. This filing indicates that CPS has likely secured new financing or restructured existing debt, which is crucial for a company in the finance services sector. For investors, this matters because it could impact the company's liquidity, cost of capital, and ultimately, its profitability and ability to fund future operations, potentially affecting stock valuation.

Why It Matters

This filing signals a significant financial event for Consumer Portfolio Services, Inc., potentially impacting its debt structure, cash flow, and future growth prospects. Investors should assess the nature of this new obligation to understand its implications for the company's financial health.

Risk Assessment

Risk Level: medium — The filing indicates a new financial obligation without specific details, which could introduce either positive or negative risks depending on the terms and size of the obligation.

Analyst Insight

Investors should monitor subsequent filings (like 10-Q or 10-K) for specific details regarding the terms, size, and purpose of the new material definitive agreement and financial obligation to assess its impact on the company's financial health and future prospects.

Key Players & Entities

• CONSUMER PORTFOLIO SERVICES, INC. (company) — the registrant filing the 8-K
• January 24, 2024 (date) — date of the earliest event reported
• 0000889609 (company) — Central Index Key (CIK) for Consumer Portfolio Services, Inc.
• 1-11416 (company) — Commission File Number for Consumer Portfolio Services, Inc.

Forward-Looking Statements

• Consumer Portfolio Services, Inc. will provide further details on the material definitive agreement and financial obligation in its next quarterly or annual report. (CONSUMER PORTFOLIO SERVICES, INC.) — high confidence, target: Q1 2024 Earnings Report

FAQ

Key Financial Figures

• $300.6 million — ust 2024-A (the "Trust"), approximately $300.6 million of subprime automotive receivables (the
• $280.9 million — d below), (v) the Trust issued and sold $280.9 million of asset-backed Notes, in five classes
• $300.6 m — 10% of the initial aggregate balance of $300.6 million, CPS will have the option to purc

Filing Documents

• cps_8k.htm (8-K) — 36KB
• cps_ex9901.htm (EX-99.1) — 11KB
• image_002.jpg (GRAPHIC) — 3KB
• 0001683168-24-000532.txt ( ) — 230KB
• cpss-20240124.xsd (EX-101.SCH) — 3KB
• cpss-20240124_lab.xml (EX-101.LAB) — 34KB
• cpss-20240124_pre.xml (EX-101.PRE) — 22KB
• cps_8k_htm.xml (XML) — 4KB

01. Entry into a Material Definitive

Item 1.01. Entry into a Material Definitive Agreement. The information contained in Item 2.03 of this report is hereby incorporated by reference into this Item 1.01. The registrant disclaims any implication that the agreements relating to the transactions described in this report are other than agreements entered into in the ordinary course of its business. Securitization of Receivables On January 24, 2024, the registrant Consumer Portfolio Services, Inc. ("CPS") and its wholly owned subsidiary CPS Receivables Five LLC ("Subsidiary") entered into a series of agreements under which Subsidiary purchased from CPS, and sold to CPS Auto Receivables Trust 2024-A (the "Trust"), approximately $300.6 million of subprime automotive receivables (the "Receivables").

03. Creation of a Direct Financial

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. Securitization of Receivables CPS, Subsidiary, the Trust and others on January 24, 2024, entered into a series of agreements that, among other things, created long-term obligations that are material to CPS, Subsidiary and the Trust. Under these agreements (i) CPS sold the Receivables to Subsidiary (ii) Subsidiary sold the Receivables to the Trust (iii) the Trust deposited the Receivables with Computershare Trust Company, N.A. ("CTCNA"), as trustee of a grantor trust, receiving in return a certificate of beneficial interest ("CBI") representing beneficial ownership of the Receivables, (iv) the Trust pledged the CBI to CTCNA as indenture trustee for benefit of the holders of the Notes (as defined below), (v) the Trust issued and sold $280.9 million of asset-backed Notes, in five classes (such Notes collectively, the "Notes"), and (vi) a cash deposit (the "Reserve Account") in the amount of 1.00% of the aggregate balance of the Receivables was pledged for the benefit of the holders of the Notes. Security for the repayment of the Notes consists of the Receivables and the rights to payments relating to the Receivables. The Receivables were purchased by CPS from automobile dealers, and CPS will act as the servicer of the Receivables. Credit enhancement for the Notes consists of over-collateralization and the Reserve Account. CTCNA will act as collateral agent and trustee on behalf of the secured parties, and is the backup servicer. The Notes are obligations only of the Trust, and not of Subsidiary nor of CPS. Nevertheless, the Notes are properly treated as long-term debt obligations of CPS. The sale and issuance of the Notes, treated as secured financings for accounting and tax purposes, are treated as sales for all other purposes, including legal and bankruptcy purposes. None of the assets of the Trust or Subsidiary are available to pay othe

01. Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits. One exhibit is included with this report: 99.1 News release re securitization transaction. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 3

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONSUMER PORTFOLIO SERVICES, INC. Dated: January 29, 2024 By: /s/ Denesh Bharwani Denesh Bharwani Executive Vice President Signing on behalf of the registrant 4

View Full Filing

View this 8-K filing on SEC EDGAR