Asbury: Leverage to fall to 3x from 4x by 2022 following acquisition

By Devika Patel

Knoxville, Tenn., Dec. 12 – Asbury Automotive Group, Inc. will lever up to 4x following the planned all-cash $1 billion acquisition of 17 luxury vehicle dealerships from Park Place Dealerships.

Following the acquisition, which management is assuming will settle on March 31, 2020, debt reduction will become a priority and leverage is expected to fall back below 3x by 2022.

The company expects to use existing credit facilities, cash flow from operations and committed financing arrangements with BofA Securities to fund the acquisition.

Management expects to replace the committed financing with permanent financing prior to closing.

“This transaction is expected to be funded through a combination of Asbury’s existing credit facilities, cash flow from operations and committed financing arrangements,” vice president of finance and treasurer Matt Pettoni said on the company’s conference call announcing the acquisition on Thursday.

“Asbury has secured committed financing, which it expects to replace with permanent financing prior to closing.

“Although the transaction is expected to take our targeted leverage of 2x to 3x above that range, we believe that, given the accretive nature of deal, we can maintain a solid credit profile and de-lever to under 3x by 2022.

“Our primary capital allocation focus will be on de-levering through debt reduction and growth in earnings,” he said.

Asbury is a Duluth, Ga.-based automotive retailer.

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