Asset Acceptance Capital Corp., a Warren, Mich.-baed public debt buyer and collector of charged-off consumer loans, on Tuesday announced plans to close its Chicago collections office, a decision expected to reduce the company's operating expenses by approximately $2 million per year.
Rion Needs, president and CEO at Asset Acceptance, said, "We continue to evaluate our asset base, which includes rationalizing underperforming assets. To date, our Chicago office has consistently had some of the lowest productivity rates and the highest level of attrition within our network."
The company will incur approximately $1.1 million in restructuring charges related to the closing during the fourth quarter, which include employee termination benefits, contract termination fees for remaining lease payments for the Chicago location, accelerated depreciation and other exit costs.
The employee termination benefits, contract termination costs and other exit costs will require an outlay of cash of approximately $1.0 million.
"While we will continue to identify strategies to further improve our cost structure and grow collections throughout our business, there are no immediate plans for additional office consolidation at this time," Needs says. "The savings we anticipate to realize from the Chicago office consolidation are expected to be redeployed to further our long-term initiatives to drive growth and improve profitability throughout our business."
The company expects to shift existing inventory to other Asset Acceptance offices or agency partners. "We anticipate that this action will favorably impact overall profitability and productivity without sacrificing top-line collections," Needs says.
Asset Acceptance reported two months ago that second quarter profit beat estimates, helped by a rise in revenue. Cash collections rose to $128 million from $90.5 million, in the year-ago quarter. The company purchased portfolios in the quarter with a face value of $1.5 billion, see story.
Asset Acceptance is facing an investigation by the Federal Trade Commission, see story.