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S&P puts Asbury Automotive on watch
S&P said it placed its ratings for Asbury Automotive Group Inc. on CreditWatch with negative implications on the company’s plans to acquire certain assets of luxury dealer group Park Place Dealerships for $1 billion in an all-cash transaction, excluding vehicle inventory.
“Though we expect the acquisition to make a meaningful contribution to Asbury’s operating results in 2020 and 2021, the incremental debt could drive leverage above our downside trigger of 4x in 2020 and 2021,” said S&P in a press release.
S&P said it plans to meet with Asbury’s management to clarify the company’s acquisition strategy, leverage target, synergy timelines, and debt-reduction plans. “Should we conclude that Asbury’s financial policy has become more aggressive or that the company is unlikely to maintain long-term leverage below 4x, we may lower our issuer credit rating by one notch,” the agency said.
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