KAR Auction Services to repay notes, pay down loan with IPO proceeds

By Angela McDaniels

Tacoma, Wash., Nov. 30 - KAR Auction Services, Inc. plans to use the proceeds from its initial public offering of common stock to pay down debt, according to a company news release.

Some of the proceeds will be used to repay and/or repurchase amounts under one or more of the company's 10% senior subordinated notes due 2015, 8¾% senior notes due 2014 and floating-rate senior notes due 2014.

The company will use additional proceeds, together with about $200 million of cash on hand, to repay $250 million of outstanding borrowings under its senior secured term loan and pay $3.6 million of amendment fees.

Finally, KAR plans to pay $10.5 million of termination fees to its equity sponsors in connection with the termination of its financial advisory agreements with each of them.

The company is selling 23 million shares. The estimated range for the IPO price is $15 to $17 per share, and there is a greenshoe for 3.45 million additional shares.

KAR is the Carmel, Ind.-based holding company for Adesa, Inc., a provider of wholesale used vehicle auctions; Insurance Auto Auctions, Inc., a salvage auto auction company; and Automotive Finance Corp., a provider of floorplan financing to used vehicle dealers.

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