America’s Car-Mart, Inc. Announces Pricing of Inaugural Asset-Backed Securitization Transaction and Amendment to Loan and Security Agreement
April 25 2022 - 4:29PM
America’s Car-Mart, Inc. (NASDAQ: CRMT) (the “Company”) today
announced that it has priced $400 million in aggregate principal
amount of asset-backed notes (the “Notes”), a subprime auto loan
asset-backed securitization transaction. The Notes will be issued
in four classes, collateralized by loans directly originated by the
Company’s operating subsidiaries, America’s Car Mart, Inc. and
Texas Car-Mart, Inc. (collectively “Car Mart”), with expected
ratings of AA- through BB- by Kroll Bond Rating Agency (“KBRA”),
and have a final maturity date of April 20, 2029. Credit
enhancement for the Notes will consist of overcollateralization, a
reserve account funded with an initial amount of not less than
2.00% of the pool balance as of the cut-off date, excess interest
on the receivables, and, in the case of the Class A Notes, the
Class B Notes and the Class C Notes, the subordination of certain
payments to the noteholders of less senior classes of notes.
Additional details related to the Notes are as follows:
|
|
Initial Principal Amount |
Initial Credit Enhancement |
Fixed Coupon Rate (per annum) |
Preliminary KBRA Rating(1) |
Class A Notes |
$ |
236,000,000 |
60.70% |
3.23% |
AA- (sf) |
Class B Notes |
|
52,000,000 |
51.60% |
4.47% |
A- (sf) |
Class C Notes |
|
74,570,000 |
38.55% |
5.48% |
BBB- (sf) |
Class D Notes |
|
37,430,000 |
32.00% |
8.58% |
BB- (sf) |
Total |
$ |
400,000,000 |
|
|
|
|
|
|
|
|
|
(1) |
|
KBRA appends an (sf) indicator to ratings assigned to structured
finance obligations. |
The Notes were priced with a weighted average
fixed coupon rate of 5.14% per annum to the expected clean-up call.
The Notes will be issued by ACM Auto Trust 2022-1 (the “Issuer”),
an indirect subsidiary of the Company. The Issuer will be the sole
obligor of the Notes; the Notes will not be obligations of or
guaranteed by the Company or any of its other affiliates or
subsidiaries. Car Mart will act as the servicer of the auto loan
receivables securing the Notes. The net proceeds from the Notes
will be used to pay outstanding debt, make the initial deposit into
a reserve account, and for other general purposes. The expected
settlement date for the transaction is April 27, 2022.
“We are excited to diversify our funding sources
by entering the securitization market. This transaction represents
an important step as we prepare for continuing growth,” said Jeff
Williams, President and Chief Executive Officer of the Company. “As
we look ahead, this market will offer us greater access to credit
with a more efficient capital structure.”
The Notes will not be registered under the
Securities Act of 1933, as amended (the “Securities Act”), or any
state securities laws, and may not be offered or sold in the United
States absent registration or an applicable exemption from, or a
transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws. The Notes are
being offered only to qualified institutional buyers in a private
offering under Rule 144A under the Securities Act.
This press release is not an offer to sell, nor
a solicitation of an offer to buy, any securities, nor shall there
be any sale of these securities in any state or jurisdiction in
which the offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of such
state or jurisdiction. Any offers of the securities will be made
only by means of a full offering memorandum.
In connection with the asset-backed
securitization transaction, the Company entered into Amendment No.
4 to the Company’s Third Amended and Restated Loan and Security
Agreement (the “Agreement”) with BMO Harris Bank, N.A., as agent
for a group of lenders. Amendment No. 4 to the Agreement (the
“Amendment”) amends the Agreement to permit the sale, contribution,
or transfer of vehicle contracts to, and certain repurchases of
such contracts from, an indirect special purpose subsidiary of the
Company in connection with a securitization transaction, in each
case subject to specified conditions. The Amendment also replaces
LIBOR as the applicable benchmark interest rate for borrowings
under the Agreement with the daily simple Secured Overnight
Financing Rate (“SOFR”) and increases the unused line fee rate from
0.25% to 0.375% if the average daily amount outstanding during the
preceding month is less than 50% of the revolver commitments.
About America's Car-Mart
America’s Car-Mart operates automotive
dealerships in twelve states and is one of the largest publicly
held automotive retailers in the United States focused exclusively
on the “Integrated Auto Sales and Finance” segment of the used car
market. The Company specializes in the sale of quality, pre-owned
vehicles, and features flexible used car financing options for
customers with bad credit, no credit, repossessions or even past
bankruptcy and emphasizes superior customer service and the
building of strong personal relationships with its customers. The
Company operates its dealerships primarily in smaller cities
throughout the South-Central United States selling quality used
vehicles and providing financing for substantially all of its
customers. For more information about America’s Car-Mart, including
investor presentations, please visit our website at
www.car-mart.com.
This press release contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements address
the Company’s future objectives, plans and goals, as well as the
Company’s intent, beliefs and current expectations regarding future
events and operating performance, including statements regarding
the proposed private offering of the Notes, and can generally be
identified by words such as “may,” “will,” “should,” “could,”
“believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” and
other similar words or phrases. These forward-looking statements
are based on the Company’s current estimates and assumptions and
involve various risks and uncertainties. As a result, you are
cautioned that these forward-looking statements are not guarantees
of future events or performance, and that actual results could
differ materially from those projected in these forward-looking
statements. Factors that may cause actual results to differ
materially from the Company’s projections include, but are not
limited to:
- failure of KBRA to rate the Notes
at the anticipated ratings levels, which is a closing condition of
the offering, or at all;
- changes in the financial markets,
including changes in credit markets, interest rates, securitization
markets generally and specifically, the Company’s proposed
securitization;
- the willingness of investors to buy
the Notes;
- general economic conditions in the
markets in which the Company operates, including, but not limited
to, fluctuations in gas prices, grocery prices and employment
levels;
- the availability of credit
facilities and access to capital on terms acceptable to us to
support the Company’s business;
- the Company’s ability to underwrite
and collect its contracts effectively;
- competition;
- dependence on existing management;
ability to attract, develop and retain qualified general
managers;
- availability of quality vehicles at
prices that will be affordable to customers;
- changes in consumer finance laws or
regulations, including, but not limited to, rules and regulations
that have recently been enacted or could be enacted by federal and
state governments;
- ability to keep pace with
technological advances and changes in consumer behavior affecting
the Company’s business;
- security breaches, cyber-attacks,
or fraudulent activity; and
- the ability to successfully
identify, complete and integrate new acquisitions.
Additionally, risks and uncertainties that may
affect future results and events include those described from time
to time in the Company’s SEC filings. The Company undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the dates
on which they are made.
Contacts: Jeff Williams, CEO
at (479) 464-9944 or Vickie Judy, CFO at (479) 464-9944
Americas Car Mart (NASDAQ:CRMT)
Historical Stock Chart
From May 2024 to Jun 2024
Americas Car Mart (NASDAQ:CRMT)
Historical Stock Chart
From Jun 2023 to Jun 2024