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These excerpts taken from the AN 10-K filed Feb 28, 2008. Senior
Unsecured Notes and Credit Agreement
In April 2006, we sold $300.0 million of floating rate
senior unsecured notes due April 15, 2013, and
$300.0 million of 7% senior unsecured notes due
April 15, 2014, in each case at par. The floating rate
senior unsecured notes bear interest at a rate equal to
three-month LIBOR plus 2.0% per annum, adjusted quarterly, and
may be redeemed by us on or after April 15, 2008, at 103%
of principal, on or after April 15, 2009, at 102% of
principal, on or after April 15, 2010, at 101% of
principal, and on or after April 15, 2011, at 100% of
principal. The 7% senior unsecured notes may be redeemed by
us on or after April 15, 2009, at 105.25% of principal, on
or after April 15, 2010, at 103.5% of principal, on or
after April 15, 2011, at 101.75% of principal, and on or
after April 15, 2012, at 100% of principal.
In April 2006, we also completed the first amendment to our
credit agreement to provide: (1) a $675.0 million
revolving credit facility that provides for various interest
rates on borrowings generally at LIBOR plus 0.80%, and
(2) a $600.0 million term loan facility bearing
interest at a rate equal to LIBOR plus 1.25%. In December 2006,
the borrowing capacity of the revolving credit facility was
increased to $700.0 million under the amended credit
agreement.
The proceeds of the senior unsecured notes and term loan
facility, together with cash on hand and borrowings of
$80.0 million under the amended revolving credit facility,
were used to: (1) purchase 50 million shares of our
common stock at $23 per share for an aggregate purchase price of
$1.15 billion pursuant to our equity tender offer,
(2) purchase $309.4 million aggregate principal of our
9% senior unsecured notes for an aggregate total
consideration of $339.8 million pursuant to our debt tender
offer and consent solicitation, and (3) pay related
financing costs. Approximately $34.5 million of tender
premium and other financing costs related to our debt tender
offer was expensed during 2006.
We have negotiated a letter of credit sublimit as part of our
revolving credit facility. The amount available to be borrowed
under the revolving credit facility is reduced on a
dollar-for-dollar basis by the cumulative amount of any
outstanding letters of credit, which totaled $78.8 million
at December 31, 2007. We had borrowings outstanding under
the revolving credit facility of $260.0 million at
December 31, 2007, leaving $361.2 million of borrowing
capacity at December 31, 2007.
In July 2007, we completed a second amendment of the credit
agreement. Under the terms of the second amendment, the interest
rate on the term loan facility decreased from LIBOR plus 1.25%
to LIBOR plus 0.875% and the interest rate on the revolving
credit facility decreased from LIBOR plus 0.80% to LIBOR plus
Table of Contents
AUTONATION,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
0.725%. Additionally, the credit agreement termination date was
extended from July 14, 2010, to July 18, 2012, and
certain other terms and conditions were modified as a result of
this amendment. We incurred $1.6 million of expenses in
connection with this modification during 2007, which are
included as a component of Other Interest Expense in the
accompanying Consolidated Income Statements.
The credit spread charged for the revolving credit facility and
term loan facility is impacted by our senior unsecured credit
ratings. On November 29, 2007, Standard and Poor’s
Rating Services revised its outlook for AutoNation to negative
from stable.
Our senior unsecured notes and borrowings under the credit
agreement are guaranteed by substantially all of our
subsidiaries. Within the meaning of
Regulation S-X,
Rule 3-10,
AutoNation, Inc., (the parent company) has no independent assets
or operations, the guarantees of its subsidiaries are full and
unconditional and joint and several, and any subsidiaries other
than the guarantor subsidiaries are minor.
Senior Unsecured Notes and Credit Agreement In April 2006, we sold $300.0 million of floating rate senior unsecured notes due April 15, 2013, and $300.0 million of 7% senior unsecured notes due April 15, 2014, in each case at par. The floating rate senior unsecured notes bear interest at a rate equal to three-month LIBOR plus 2.0% per annum, adjusted quarterly, and may be redeemed by us on or after April 15, 2008, at 103% of principal, on or after April 15, 2009, at 102% of principal, on or after April 15, 2010, at 101% of principal, and on or after April 15, 2011, at 100% of principal. The 7% senior unsecured notes may be redeemed by us on or after April 15, 2009, at 105.25% of principal, on or after April 15, 2010, at 103.5% of principal, on or after April 15, 2011, at 101.75% of principal, and on or after April 15, 2012, at 100% of principal. In April 2006, we also completed the first amendment to our credit agreement to provide: (1) a $675.0 million revolving credit facility that provides for various interest rates on borrowings generally at LIBOR plus 0.80%, and (2) a $600.0 million term loan facility bearing interest at a rate equal to LIBOR plus 1.25%. In December 2006, the borrowing capacity of the revolving credit facility was increased to $700.0 million under the amended credit agreement. The proceeds of the senior unsecured notes and term loan facility, together with cash on hand and borrowings of $80.0 million under the amended revolving credit facility, were used to: (1) purchase 50 million shares of our common stock at $23 per share for an aggregate purchase price of $1.15 billion pursuant to our equity tender offer, (2) purchase $309.4 million aggregate principal of our 9% senior unsecured notes for an aggregate total consideration of $339.8 million pursuant to our debt tender offer and consent solicitation, and (3) pay related financing costs. Approximately $34.5 million of tender premium and other financing costs related to our debt tender offer was expensed during 2006. We have negotiated a letter of credit sublimit as part of our revolving credit facility. The amount available to be borrowed under the revolving credit facility is reduced on a dollar-for-dollar basis by the cumulative amount of any outstanding letters of credit, which totaled $78.8 million at December 31, 2007. We had borrowings outstanding under the revolving credit facility of $260.0 million at December 31, 2007, leaving $361.2 million of borrowing capacity at December 31, 2007. In July 2007, we completed a second amendment of the credit agreement. Under the terms of the second amendment, the interest rate on the term loan facility decreased from LIBOR plus 1.25% to LIBOR plus 0.875% and the interest rate on the revolving credit facility decreased from LIBOR plus 0.80% to LIBOR plus
Table of ContentsAUTONATION, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 0.725%. Additionally, the credit agreement termination date was extended from July 14, 2010, to July 18, 2012, and certain other terms and conditions were modified as a result of this amendment. We incurred $1.6 million of expenses in connection with this modification during 2007, which are included as a component of Other Interest Expense in the accompanying Consolidated Income Statements. The credit spread charged for the revolving credit facility and term loan facility is impacted by our senior unsecured credit ratings. On November 29, 2007, Standard and Poor’s Rating Services revised its outlook for AutoNation to negative from stable. Our senior unsecured notes and borrowings under the credit agreement are guaranteed by substantially all of our subsidiaries. Within the meaning of Regulation S-X, Rule 3-10, AutoNation, Inc., (the parent company) has no independent assets or operations, the guarantees of its subsidiaries are full and unconditional and joint and several, and any subsidiaries other than the guarantor subsidiaries are minor. | EXCERPTS ON THIS PAGE:
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