Item 1.01
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Entry into a Material Definitive Agreement.
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On November 10, 2017, AutoNation, Inc. (the
Company) closed its sale of $450.0 million aggregate principal amount of 3.500% Senior Notes due 2024 (the 2024 Notes) and $300.0 million aggregate principal amount of 3.800% Senior Notes due 2027 (the 2027
Notes and together with the 2024 Notes, the Notes), pursuant to an underwriting agreement (the Underwriting Agreement), entered into on November 7, 2017, by and among the Company, the Companys subsidiary
guarantors named therein (the Guarantors) and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC, as representatives of the other
several underwriters listed in Schedule A thereto. The 2024 Notes were issued at 99.876% of the aggregate principal amount, representing a yield to maturity of 3.520%, and the 2027 Notes were issued at 99.925% of the aggregate principal amount,
representing a yield to maturity of 3.809%. The Notes were sold pursuant to the Companys registration statement on Form
S-3,
as amended (File
No. 333-209585),
filed with the U.S. Securities and Exchange Commission (the SEC).
Certain affiliates of each of the underwriters act as agents and/or lenders
under the revolving credit facilities under the Companys credit agreement. In addition, certain affiliates of the underwriters act as agents or lenders for certain of the Companys vehicle floorplan facilities. An affiliate of Wells Fargo
Securities, LLC acts as trustee under the indenture that governs the Companys existing notes and the Indentures that govern the 2024 Notes and 2027 Notes. Some of the underwriters and their affiliates have engaged in, and may in the future
engage in, investment banking and other commercial dealings in the ordinary course of business with the Company or its affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
The Notes were issued under a senior indenture, dated as of April 14, 2010 (the Base Indenture), between the Company and Wells Fargo Bank,
National Association, as trustee (the Trustee), as amended and supplemented, with respect to the 2024 Notes, by a supplemental indenture entered into on November 10, 2017 by and among the Company, the Trustee and the Guarantors (the
2024 Notes Supplemental Indenture and together with the Base Indenture, the 2024 Notes Indenture) and, as amended and supplemented, with respect to the 2027 Notes, by a supplemental indenture entered into on November 10,
2017 by and among the Company, the Trustee and the Guarantors (the 2027 Notes Supplemental Indenture and together with the Base Indenture, the 2027 Notes Indenture). The 2024 Notes Indenture and the 2027 Notes Indenture are
referred to collectively as the Indentures.
The 2024 Notes will mature on November 15, 2024 and bear interest at a rate equal to 3.500%
per year, payable on May 15 and November 15 of each year, beginning on May 15, 2018. The 2027 Notes will mature on November 15, 2027 and bear interest at a rate equal to 3.800% per year, payable on May 15 and
November 15 of each year, beginning on May 15, 2018. The interest rate payable on the Notes is subject to adjustment upon the occurrence of certain credit rating events as provided in the Indentures. The Notes are guaranteed by
substantially all of the Companys subsidiaries. Such subsidiary guarantees may be released in certain circumstances as set forth in the Indentures. The Indentures contain certain restrictive covenants that, among other things, limit the
ability of the Company to incur liens, enter into sale and leaseback transactions and merge, consolidate or transfer all or substantially all of its assets.
The Underwriting Agreement, the Base Indenture, the 2024 Supplemental Indenture (which includes the Form of 3.500% Senior Notes due 2024) and the 2027
Supplemental Indenture (which includes the Form of 3.800% Senior Notes due 2027) are filed as exhibits hereto, and each is incorporated herein by reference. The descriptions of the provisions of the Underwriting Agreement and the Indentures are
summary in nature and are qualified in their entirety by reference to the provisions of such agreements.