Group 1 lowering balance of 8¼% senior subordinated notes through selective repurchases

By Jennifer Lanning Drey

Portland, Ore., Sept. 23 - Group 1 Automotive, Inc. has been selectively repurchasing its 8¼% senior subordinated notes due 2013 and now has $82.2 million of the originally issued $150 million outstanding, John C. Rickel, chief financial officer of Group 1, said during a Tuesday presentation at the Thomas Weisel Partners Consumer Conference in New York.

"The good thing with our balance sheet is there's no near-term liquidity pressure that we're facing," Rickel said.

Group 1's balance sheet also includes a $350 million acquisition line of credit, which has $50 million drawn under it.

Rickel said Group 1 has recently scaled back on acquisitions because while there is plenty of room for consolidation in the market and there are attractive acquisition targets, the company is not seeing what it considers to be appropriate valuations.

"Right now we're kind of keeping the powder dry, waiting for better pricing," he said.

In the meantime, the company is focused on initiatives that will promote organic same-store growth and expense reductions.

Group 1 has lowered its capital expenditure budget for 2008 to $55 million from $70 million in 2007 as a result of the challenging sales environment. If market conditions continue, the company may further reduce capex, Rickel said.

The company also seeks to increase its real estate ownership, which it believes will lead to improved operational flexibility and lower costs.

Group 1 is a Houston-based automotive retailer.

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