KAR accepts $225.59 million 10% notes in oversubscribed tender offer

By Angela McDaniels

Tacoma, Wash., Jan. 5 - KAR Auction Services, Inc. said it accepted for purchase $225,592,000 principal amount of its $425 million of 10% senior subordinated notes due 2015 and none of its $450 million of 8¾% senior notes due 2014 or $150 million of floating-rate senior notes due 2014.

A tender offer for the notes ended at 11:59 p.m. ET on Jan. 4.

The company said it would pay no more than $243,639,925 for notes in the tender offer, excluding interest. KAR accepted only a portion of the 10% notes and none of the 8¾% notes or floating-rate notes because the offer was oversubscribed. The notes are listed in order of acceptance priority level.

Holders tendered $231,361,000 of 10% notes, $296,243,000 of 8¾% notes and $54,578,000 of floating-rate notes. The proration factor for the 10% notes is 97.5%.

For each $1,000 principal amount, the company will pay $1,080 for the 10% notes and would have paid $1,060 for the 8¾% notes and $940 for the floating-rate notes.

The payout includes an early tender premium of $40 for each note tendered by the early tender time, which was 5 p.m. ET on Dec. 15.

The company will also pay accrued interest. The settlement date was expected to be Jan. 5.

The tender offer began Dec. 2. The maximum payment amount was originally $276.8 million. It was later lowered to $213.6 million and then raised to $243,639,925.

The early tender deadline was extended from Dec. 11, and the expiration date was previously scheduled for Dec. 30 and, prior to that, Dec. 28.

The consummation of the tender offer was subject to the consummation of the company's planned initial public offering of common stock and the receipt of tenders for at least $191.25 million of the 10% notes by the early tender time. If the latter condition had not been satisfied, the company may have decided to cancel the tender offer, waive the condition in whole or waive the condition in part.

If the company had waived the condition in part, it would not have purchased any 10% notes and would have spent up to $49.98 million, reduced from the original $113.18 million, to purchase 8¾% notes and floating-rate notes.

Goldman Sachs & Co. (212 357-4692 or 800 828-3182) and RBC Capital Markets Corp. (212 618-2205) were the dealer managers, and Global Bondholder Services Corp. (212 430-3774 or 866 470-4300) was the information agent and depositary.

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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