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Prestige Announces New Credit Facility, Hosts Open BKs Symposium

February 25, 2009

SALT LAKE CITY — Two weeks after hosting a well-received open bankruptcies symposium, leading subprime lender Prestige Financial Services Inc. has announced the establishment of a three-year senior secured revolving line of credit with Wells Fargo Preferred Capital.

“Amid unprecedented disruption in our industry, Prestige is pleased to have the support of a partner as widely-respected as Wells Fargo,” said Prestige CEO Robert Avery. “We’ve made remarkable advances in both the yield and performance of our recent originations, and this facility will play an important role in our continued success.”

The facility, which replaces an existing line of credit, will support the Salt Lake City-based company’s ongoing auto financing activities. WFPC will act as both lead lender and agent, and will allow additional lenders to participate in syndication, to a maximum principal amount of $300 million.

“This line of credit adds another facet to our outstanding, long-term relationship with Prestige’s parent, the Larry H. Miller Group,” says Tom Murphy, WFPC's president. “Prestige’s proven expertise as an originator and servicer, combined with the Miller backing, presented a compelling case for us to further Wells Fargo’s support of consumer credit through this new facility.”

Now in its fifteenth year of operations, Prestige provides consumer financing solutions for dealerships both within and outside of the Larry H. Miller Group, which is the nation’s tenth-largest auto retailer. Prestige manages more than $600 million of automobile loans.

On Feb. 10–11, the lender hosted a two-day Open Bankruptcy Auto Finance Symposium at its Salt Lake City headquarters on Feb. 10–11. Dealers were trained by bankruptcy attorneys, advertising experts, lender executives and dealership finance directors on virtually all topics essential to success in open bankruptcy business.

The symposium, which Prestige executives believe to be the first such event devoted exclusively to helping dealerships service pre-discharge buyers, was attended by several dozen special finance professionals representing all four U.S. time zones. Participation was free of charge.

Keynote speaker Richard J. Hayden told the audience that personal bankruptcy has lost much of its stigma, summing up the prevailing attitude among consumers by saying, “If Trump can file, why can’t I?” Based in Spokane, Wash., Hayden is a practicing bankruptcy creditor’s attorney. He emphasized several points that can help dealers to best traverse the bankruptcy landscape that continues to evolve under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) as well as economic stimulus-related legislation currently working its way through Congress.

“Prestige’s Open 13 product presents a win-win-win,” Hayden stated. “The dealer sells a car to someone who is having a hard time getting credit for a loan while in bankruptcy, the customer can keep going to work, and the trustee continues to collect payments on the bankruptcy plan for all creditors.”

Hayden also pointed out that Prestige’s rate reduction program, which lowers the customer’s interest rate as payments are made on time, can appeal to trustees who might otherwise object to the risk-adjusted APRs associated with bankruptcy auto finance.

The symposium gave dealers important insights into several other aspects of the pre-discharge bankruptcy business.

“We’ve been very successful in subprime for a long time, but given the abundance of non-bankruptcy subprime buyers in our market, we’ve never really targeted the open BKs,” noted Sean Murphy, finance manager at Phoenix’s Earnhardt Auto Centers, Prestige’s top-volume partner in both 2007 and 2008. “With bankruptcies skyrocketing as they are, it’s definitely something that’s caught our attention. That’s why I’m here.”

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