Lithia Motors boosts loan agreement to $1 billion, lowers pricing

By Toni Weeks

San Luis Obispo, Calif., Dec. 18 - Lithia Motors, Inc. entered into a second amendment to its loan agreement with U.S. Bank NA as agent, according to an 8-K filing with the Securities and Exchange Commission.

The amendment, which is effective Dec. 16, expanded the loan facility to $1 billion from $800 million and extended the expiration date to December 2018 from April 2017. The facility may be further expanded to $1.25 billion via an accordion feature.

Borrowings for each type of debt varies, with interest for new vehicle floorplan financing now at one-month Libor plus 125 basis points, reduced from 150 bps, and interest for used vehicle floorplan financing at one-month Libor plus 150 bps, down from 175 bps. The interest rate on the revolving financing will be one-month Libor plus 125 bps to 250 bps, previously 175 bps to 250 bps, with the exact margin based on the company's leverage ratio.

Under the amendment, the initial allocation of the financing commitment is for:

• A maximum of $150 million, increased from $80 million, in used vehicle inventory floorplan financing;

• A maximum of $150 million, increased from $145 million, in revolving financing for general corporate purposes, including acquisitions and working capital; and

• A total of up to $700 million, increased from $575 million, in new vehicle inventory floorplan financing.

The amendment allows some reallocations of the financing commitments provided that the used vehicle inventory floorplan commitment does not exceed $200 million, the revolving financing commitment does not exceed $200 million, and the sum of those commitments plus the new vehicle inventory floorplan financing commitment, does not exceed the total financing commitment.

JPMorgan Chase Bank, NA, Toyota Motor Credit Corp., Mercedes-Benz Financial Services USA LLC, BMW Financial Services NA, LLC, Bank of America, NA, Bank of the West, KeyBank NA, Nissan Motor Acceptance Corp., TD Bank, NA, VW Credit, Inc., Hyundai Capital America and American Honda Finance Corp. are lenders.

Lithia Motors is a Meford, Ore.-based automotive retailer.

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