Lithia buys back $38 million 2.875% convertibles, reduces bank borrowings

By Jennifer Chiou

New York, Nov. 7 - Lithia Motors, Inc. said it repurchased $38 million of its 2.875% senior subordinated convertibles notes, leaving $47 million of the notes outstanding, according to a 10-Q filing with the Securities and Exchange Commission.

The company said it used $33.2 million of the proceeds from selective mortgage financings and sale-leasebacks, store sales and other asset sales for the repurchase, noting that it has generated about $100 million of capital through October.

Remaining capital was used to pay down the company's line of credit, which was further reduced to a $66 million outstanding as of Oct. 31 from $84 million outstanding as of Sept. 30 and.

The company said it is preparing itself to refinance its remaining 2.875% convertible notes, which can be put back in May.

As required by its credit facility, Lithia said it plans to create sufficient available borrowing capacity on its credit line by March to be able to pay off the notes no later than May.

Based in Medford, Ore., Lithia Motors and its subsidiaries operate automotive franchises.

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