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J.P. Morgan, Merrill Lynch Arrange Group 1 Automotive’s New $1.7B Credit Facilty

June 21, 2013, 07:51 AM
Filed Under: Manufacturing

Group 1 Automotive, Inc., an international, Fortune 500 automotive retailer, completed a $1.7 billion five-year revolving syndicated credit facility with 25 financial institutions that will expire in June 2018 and can be expanded to $1.95 billion total availability.

The revolving facility will provide $1.38 billion for inventory floorplan financing.  The facility will also provide $320.0 million for working capital, acquisitions and general corporate purposes, of which up to $125.0 million can be borrowed in either Euros or Pounds Sterling.  New Vehicle and Used Vehicle floorplan interest rates will decrease 25bps to one-month LIBOR plus 125bps and one-month LIBOR plus 150bps, respectively.

Lenders in the syndicated facility include 6 manufacturer-affiliated finance companies and 19 commercial banks.  The 6 manufacturer-affiliated finance companies are: Toyota Motor Credit Corporation; Mercedes-Benz Financial Services USA LLC; BMW Financial Services NA, LLC; American Honda Finance Corporation; Nissan Motor Acceptance Corporation; and VW Credit, Inc.  The 19 commercial banks are: Bank of America, N.A.; Comerica Bank; JPMorgan Chase Bank, N.A.; Wells Fargo Bank, N. A.; U.S. Bank, N.A.; Compass Bank (d/b/a BBVA Compass); Capital One, N.A.; Bank of the West; KeyBank National Association; MassMutual Asset Finance LLC; Barclays Bank PLC; Amegy Bank, N.A.; Branch Banking & Trust Company; TD Bank, N.A.; Ally Insurance Holdings Inc.; NYCB Specialty Finance Company, LLC.; Amarillo National Bank; BOKF, NA (d/b/a Bank of Oklahoma); and Cadence Bank, N.A.  The syndication was arranged through J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

"The expanded $1.7 billion revolving facility further strengthens Group 1's balance sheet by locking in ample, reasonably-priced capital for vehicle financing and acquisition growth for the next five years," said John C. Rickel, Group 1's senior vice president and chief financial officer. "The commitments made by the 20 existing lenders are a testament to the strong relationships we have established with our financial partners over the years and we are delighted to have 5 new lenders join our syndicate, including American Honda Finance Corporation, a new manufacturer-affiliated partner."

Group 1 noted that based on the vehicle inventory financed under the credit facility of $945.0 million at March 31, 2013, net pretax floorplan interest expense would decrease by about $0.3 million per quarter commencing third quarter 2013 through the remainder of the new facility.

Group 1 owns and operates 139 automotive dealerships, 178 franchises, and 35 collision centers in the United States, the United Kingdom and Brazil that offer 35 brands of automobiles. Through its dealerships, the company sells new and used cars and light trucks; arranges related vehicle financing, service and insurance contracts; provides automotive maintenance and repair services; and sells vehicle parts.

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