AutoNation announces $900 million fixed-, floating-rate notes to fund tenders

By Paul A. Harris

St. Louis, March 7 - AutoNation, Inc. plans to make a $900 million offering of senior unsecured notes in fixed-rate and floating-rate tranches via Rule 144A and Regulation S, the company said in a Tuesday news release.

The company also plans to obtain a $300 million term loan, via JP Morgan, which may be increased to $400 million, according to the release. In addition AutoNation plans to draw about $150 million from its amended $600 million revolving credit facility.

Proceeds from these financings, in addition to existing cash, will be used to purchase 50 million shares of the company's common stock at $23 per share and up to $323.5 million of its 9% senior notes due 2008. JP Morgan and Wachovia Securities are dealer managers for the tenders, which are to begin by no later than Friday.

No further information about the new notes was furnished in the press release, and the company did not return a Tuesday telephone call from Prospect News.

Fitch Ratings said it expects to assign its BB+ rating to the notes.

Standard & Poor's meanwhile placed AutoNation's senior unsecured debt rating on CreditWatch with negative implications following the company's announcement of the stock repurchase. When the transactions are completed, S&P said it will lower the senior unsecured rating to BB+ with a stable outlook.

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

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