Group 1 locks up $1.35 billion five-year revolver in two tranches

By Susanna Moon

Chicago, July 6 - Group 1 Automotive, Inc. closed a $1.35 billion five-year revolving syndicated credit facility with 21 lenders, according to an 8-K filing with the Securities and Exchange Commission.

The facility consists of two tranches: $1.1 billion for vehicle inventory floorplan financing and $250 million for working capital, including acquisitions. Up to half of the working capital line can be borrowed in either euros or pounds.

Interest on the floorplan tranche is Libor plus 150 basis points for new vehicle inventory and Libor plus 175 bps for used vehicle inventory. Interest on the acquisition line is Libor plus a margin of 150 bps to 250 bps, based on leverage.

Group 1 may expand the facility to a maximum of $1.6 billion total commitments with lender approval.

The company's dealership-owning subsidiaries are co-borrowers under the facility.

Covenants restrict Group 1's ability to dispose of assets, incur additional debt, create liens on assets, make investments and engage in mergers or consolidations.

There are also financial tests and ratios defined in the facility, such as fixed-charge coverage, leverage and a minimum net worth requirement.

The company's Ford and Lincoln dealerships will continue to obtain new vehicle floor plan financing from Ford Motor Credit Co.

Lenders in the syndicated facility consist of four manufacturer-affiliated finance companies - Toyota Motor Credit Corp., BMW Financial Services NA, LLC, Mercedes-Benz Financial Services USA LLC and Nissan Motor Acceptance Corp. - and 17 commercial banks, according to a company press release.

The commercial banks are JPMorgan Chase Bank, NA, Bank of America, NA, Comerica Bank, U.S. Bank, NA, Wells Fargo Bank, NA, Capital One, NA, Compass Bank, Key Bank NA, MassMutual Asset Finance LLC, Bank of the West, Flagstar Bank, FSB, Amegy Bank, NA, Barclays Bank plc, Motors Insurance Corp., Sovereign Bank, BOKF, NA dba Bank of Oklahoma and Amarillo National Bank. The syndication was arranged through J.P. Morgan Securities LLC and Bank of America Merrill Lynch.

"The new $1.35 billion revolving facility further strengthens Group 1's balance sheet by locking in ample, reasonably-priced capital for vehicle financing and acquisition growth for the next five years," John C. Rickel, Group 1's senior vice president and chief financial officer, said in the release.

Group 1 noted that based on the vehicle inventory financed under the credit facility of $689 million at March 31, pretax interest expense would rise by about $1.1 million a quarter under the new arrangement.

Group 1 is a Houston-based owner and operator of automotive dealerships, franchises and collision service centers.

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