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Item 1.01
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Entry into Material Definitive Agreement.
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On November 19, 2021, Asbury Automotive Group, Inc. (the “Company”) issued (i) $800,000,000 aggregate principal amount of 4.625% senior notes due 2029 (the “2029 Notes”) pursuant to an indenture, dated November 19, 2021 (the “2029 Notes Indenture”), among the Company, the subsidiary guarantors party thereto (the “Guarantors”) and U.S. Bank National Association, as trustee (the “Trustee”) and (ii) $600,000,000 aggregate principal amount of 5.000% senior notes due 2032 (the “2032 Notes” and, together with the 2029 Notes, the “Notes”) pursuant to an indenture, dated November 19, 2021 (the “2032 Notes Indenture” and, together with the 2029 Notes Indenture, the “Indentures”), among the Company, the Guarantors and the Trustee. The Notes were offered and sold either to persons reasonably believed to be “qualified institutional buyers” in reliance on Rule 144A under the Securities Act of 1933 (the “Securities Act”) or to certain non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
Interest accrues on the Notes from November 19, 2021, and interest is payable semiannually on May 15 and November 15 of each year. The first interest payment date is May 15, 2022.
The 2029 Notes bear interest at a rate of 4.625% per year. The 2029 Notes will mature on November 15, 2029. We may redeem some or all of the 2029 Notes at any time on and after November 15, 2024 at redemption prices specified in the 2029 Notes Indenture. Prior to November 15, 2024, we may also redeem up to 40% of the aggregate principal amount of the 2029 Notes using the proceeds from certain equity offerings at a redemption price of 104.625% of their principal amount plus accrued and unpaid interest, if any, to, but not including the redemption date. In addition, we may redeem some or all of the 2029 Notes at any time prior to November 15, 2024 at a price equal to 100% of the principal amount thereof plus a make-whole premium set forth in the 2029 Notes Indenture, and accrued and unpaid interest, if any. If we sell certain of our assets or experience specific kinds of changes of control, we must offer to repurchase the 2029 Notes. The terms of the 2029 Notes are set out in detail in the 2029 Notes Indenture.
The 2032 Notes bear interest at a rate of 5.000% per year. The 2032 Notes mature on February 15, 2032. We may redeem some or all of the 2032 Notes at any time on and after November 15, 2026 at redemption prices specified in the 2032 Notes Indenture. Prior to November 15, 2026, we may also redeem up to 40% of the aggregate principal amount of the 2032 Notes using the proceeds from certain equity offerings at a redemption price of 105.000% of their principal amount plus accrued and unpaid interest to, but not including the redemption date. In addition, we may redeem some or all of the 2032 Notes at any time prior to November 15, 2026 at a price equal to 100% of the principal amount thereof plus a make-whole premium set forth in the 2032 Notes Indenture, and accrued and unpaid interest, if any. If we sell certain of our assets or experience specific kinds of changes of control, we must offer to repurchase the 2032 Notes. The terms of the 2032 Notes are set out in detail in the 2032 Notes Indenture.
The Indentures contain covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make certain dividends, distributions, investments and other restricted payments, sell certain assets, agree to certain restrictions on the ability of restricted subsidiaries to make certain payments to the Company or any of its restricted subsidiaries, create certain liens, merge, consolidate or sell all or substantially all of the Company’s assets, enter into certain transactions with affiliates or designate subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications, including the suspension of certain of these covenants upon the Notes receiving certain investment grade credit ratings.
The Company intends to use the proceeds of the offering of Notes, together with additional borrowings and cash on hand, to fund, if consummated, the acquisition (the “LHM Acquisition”) of all of the equity interests of, and the real property related to, the businesses of the Larry H. Miller Dealerships and Total Care Auto, Powered by Landcar, and the payment of fees and expenses related to the foregoing, and to use the balance of the net proceeds, if any, for general corporate purposes, including other dealership acquisitions or capital investments. If either (i) the Company notifies the Trustee that it is no longer pursuing the LHM Acquisition or (ii) a closing substantially as contemplated under the acquisition agreements (the “Acquisition Agreements”) governing the LHM Acquisition does not occur on or before July 7, 2022, then the Company will be required to redeem each series of Notes at a redemption price equal to 100% of the issue price of such Notes, plus accrued and unpaid interest to, but excluding,