AutoNation restructures downsized $600 million notes offer, tightens talk on both tranches

By Paul A. Harris

St. Louis, April 4 - AutoNation, Inc. made structural changes to its downsized $600 million two-tranche offering of senior unsecured notes (Ba2/BB+/expected BB+) on Tuesday, according to an informed source.

On Wednesday morning, the company plans to price a $300 million tranche of eight-year fixed-rate notes, which it is talking at 7%, revised from earlier price talk of 7% to 7¼%. Autonation introduced a make-whole call for first three years, after which the notes will become callable at par plus three-quarters of the coupon. Call protection was decreased from four years.

The company also plans to price a tranche of seven-year floating-rate notes, which it is talking at three-month Libor plus 200 basis points area, revised from earlier price talk of Libor plus 225 bps area. In Tuesday's structural change, Autonation introduced a two-year make-whole call to the floating-rate notes, after which the notes will become callable at 102.

Tranche sizes are still subject to change, the source added.

JP Morgan, Banc of America Securities and Wachovia Securities are joint bookrunners for the Rule 144A/Regulation S transaction.

Earlier in the week the bond offering was downsized by $200 million and the bank loan increased by $300 million.

Proceeds will be used to help fund purchase 50 million shares at $23.00 per share and up to $323.5 million of 9% senior notes due 2008.

AutoNation is a Fort Lauderdale, Fla., automotive retailer.

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