Penske Automotive Group Inc.
), on August 14, said that it is planning an initial offering of
$400 million senior subordinated notes at fixed rates due in 2022.
With an increase of $150 million over this amount, the company
subsequently declared the pricing of $550 million of 5.75% senior
subordinated notes due in 2022.
The offering will be made to qualified institutional buyers in the
U.S. with respect to Rule 144A. Outside the U.S. the offerings will
be made in accordance with Regulation S of the Securities Act of
The proceeds from this offering will be utilized in the purchase of
all the company's $375 million of 7.75% senior subordinated notes
due 2016 and for the payment of fees and expenses related to the
offering. The remaining amount will be utilized in the repayments
of the company's current dues under the U.S. credit agreement and
settlement of its U.S. floor plan borrowings.
Moody's has upgraded the debt ratings for Penske based on its
improving financial profile, especially in the UK, despite of the
weak economic condition. The rating service has also raised the
corporate family and probability of default ratings to "Ba3" from
"B1" and senior subordinated debt ratings to "B2" from "B3" with a
Standard & Poor's Ratings Services has assigned 'B' rating to
Penske's proposed $400 million senior subordinated debt offering.
It has also allocated '6' rating to debt a recovery rating as it
expects that lenders would receive around 0% to 10% recovery of the
principal amount in case of a default. The rating service has a
stable outlook due to the improved credit measures, along with
revenue growth and brand mix, which will lead to generation of free
Penske Automotive Group sells new and previously owned vehicles
along with finance and insurance products. It operates 340 retail
automotive franchises, providing 41 different brands and 30
collision repair centers. Apart from its franchises in U.S. and
Europe, the company offers repair and maintenance services to the
brands it sells.
The company's product mix, including a wide range of imported and
luxury brands, helps it maintain a strong foothold in both the U.S.
and international markets. It competes with
). Currently, Penske has a Zacks #3 Rank, which translates into a
short term (1 to 3 months) Hold rating.
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