AutoNation to tender for 9% notes due 2008

By Angela McDaniels

Seattle, March 7 - AutoNation Inc. will begin a cash tender offer for the $323.5 million outstanding of its 9% senior notes due 2008, according to a company news release.

The company will also solicit consents to amend the note indenture to eliminate most of its restrictive covenants and events of default.

AutoNation said it expects to begin the offer by Friday. The consent solicitation will likely expire 10 business days after the offer begins, and the offer will remain open for at least 20 business days.

For each $1,000 principal amount of notes, the company said it will pay par plus a consideration based on a fixed spread of 50 basis points over the bid-side yield on the 4 1/8% U.S. Treasury note due Aug. 15, 2008.

The payout includes a $30 consent payment per $1,000 principal amount of notes tendered before the consent deadline.

Noteholders will also receive accrued interest up to but not including the payment date.

The offer is conditioned upon funding and tenders from holders of a majority of the notes, according to the release. The funding must also be sufficient to fund the company's concurrent cash tender offer to purchase 50 million shares of its common stock at $23 per share.

Innisfree M&A Inc. (877 825-8631 or 212 750-5833) is the information agent for the tender offer and consent solicitation. J.P. Morgan Securities Inc. and Wachovia Securities are dealer managers.

AutoNation is an automotive retailer based in Fort Lauderdale, Fla.

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