EDMONTON, Jan. 28, 2020 /CNW/ - AutoCanada Inc.
("AutoCanada" or the "Company") (TSX: ACQ), a leading
multi-location North American automobile dealership group, today
announced that it intends to complete a $125
million offering (the "Offering") of 5-year Senior
Unsecured Notes (the "Notes"). The Notes will be offered and
sold to "accredited investors" in certain provinces of Canada and to non-U.S. persons on a private
placement basis. Scotia Capital Inc., CIBC World Markets Inc. and
RBC Dominion Securities Inc. are acting as Joint Bookrunning
Managers for the Offering. Proceeds of the Offering will be used to
refinance the Company's existing 5.625% Senior Notes due
May 25, 2021 (the "2021
Notes").
Concurrent with, and conditional on, the closing of the
Offering, the Company plans to amend and extend its existing credit
facility for three years. The amended credit facility will include
a $175 million revolving credit
facility, a $750 million wholesale
floorplan financing facility and a $25
million wholesale leasing facility, for total aggregate bank
facilities of $950 million (the
"New Credit Facilities").
AutoCanada intends to use the net proceeds of the Offering,
together with borrowings under the New Credit Facility, to fund a
cash tender offer (the "Tender Offer") for the purchase of
any or all of the 2021 Notes and the redemption of any 2021 Notes
not purchased under the Tender Offer. Further details with respect
to the Tender Offer are in the Company's press release dated
January 28, 2020 announcing the
Tender Offer and in the Company's Offer to Purchase dated
January 28, 2020 and the related
Letter of Transmittal.
Paul Antony, Executive Chairman
of the Company, stated, "We are proud of the progress that the
AutoCanada team has made in addressing our balance sheet and of the
performance of our business through the second half of 2019.
This allows us to enter 2020 focused on delivering a full
year of benefits from our Go Forward
Plan in both Canada and the
U.S."
Mike Borys, Chief Financial
Officer of AutoCanada, added, "In addition to the improved
deleveraging of the balance sheet in the fourth quarter of 2019,
the refinancing of our 2021 Notes and renewal of our credit
facility will substantively improve the Company's credit profile
and financial flexibility, adding tenor to our overall debt
profile."
Preliminary Unaudited Fourth Quarter 2019 Operating
Results
Selected preliminary unaudited results for the three months
ended December 31, 2019 ("Q4
2019") are highlighted below:
- Q4 2019 revenue of approximately $805 to $825
million, representing growth of approximately 4% over the
same period in 2018;
- A reduction in total net indebtedness (total indebtedness less
cash on hand and exclusive of IFRS 16 lease liabilities) by
approximately $44 million in the
quarter, from $202 million to
$158 million (total debt outstanding
of $214 million and cash and cash
equivalents of $56 million as at
December 31, 2019). Working
capital initiatives implemented in the third quarter of 2019 led to
approximately $40 million of this
debt reduction. The Company believes these working capital
initiatives are systemic in nature, and are sustainable;
- Same store new retail unit sales growth of 1.3% compared to the
Canadian market decrease of 1.2% for brands represented by
AutoCanada, as reported by DesRosiers Automotive Consultants;
and
- An increase in AutoCanada's same store used-to-new vehicles
sold ratio to 0.86 in Q4 2019 from 0.70 in Q4 2018.
Q4 2019 results will include write-downs associated with both
the Company's U.S. platform (approximately $3 million, subject to finalization and audit)
and the Company's non-core asset portfolio (approximately
$6 million, subject to finalization
and audit).
With the trend of improving results in our U.S. operations,
management anticipates a reversal of four U.S. stores held for sale
on our balance sheet, adding approximately $36 million of lease liabilities to the 2019
year-end balance.
The Company has not yet completed its financial closing process
for Q4 2019, and the selected unaudited results provided above are
preliminary estimates. Actual results may differ materially from
these estimates due to the completion of the Company's financial
closing procedures, final adjustments, review by the Company's
auditors and other developments that may arise between now and the
time the financial results are finalized. These estimates are not a
comprehensive statement of the Company's financial results for Q4
2019 and should not be viewed as a substitute for full financial
statements prepared in accordance with International Financial
Reporting Standards, and these estimates are not necessarily
indicative of the results to be achieved for Q4 2019.
The Company's unaudited financial statements for Q4 2019 will
not be available until after the Offering is completed. The Company
is issuing preliminary results in order to enable it to disclose
such information in connection with the Offering, and the Company
does not intend to provide preliminary results in the future. The
preliminary results provided in this press release constitute
forward-looking statements within the meaning of applicable
securities laws, are based on a number of assumptions and are
subject to a number of risks and uncertainties. Please see the
section below entitled "Forward-Looking Statements".
The preliminary results have been prepared by, and are the
responsibility of, management of the Company. The Company's
independent registered public accounting firm,
PricewaterhouseCoopers LLP, has not reviewed the preliminary
results nor have they performed any procedures with respect to the
preliminary results. Neither PricewaterhouseCoopers LLP nor any
other independent accountants express an opinion or any other form
of assurance with respect to the preliminary results.
About AutoCanada
AutoCanada is a leading North American multi-location automobile
dealership group currently operating 63 franchised dealerships,
comprised of 27 brands, in eight provinces in Canada as well as a group in Illinois, USA and has over 4,200 employees.
AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Alfa
Romeo, Chevrolet, GMC, Buick,
Cadillac, Ford, Infiniti, Nissan, Hyundai, Subaru, Audi,
Volkswagen, Kia, Mazda, Mercedes-Benz, Smart, BMW, MINI, Volvo,
Toyota, Lincoln, and Honda branded
vehicles. In 2018, our dealerships sold approximately 66,000
vehicles and processed approximately 915,000 service and collision
repair orders in our 1,157 service bays generating revenue in
excess of $3 billion.
Forward-Looking Statements
Certain statements contained in this press release are
forward-looking statements and information (collectively,
"forward-looking statements") within the meaning of the
applicable Canadian securities legislation. We hereby provide
cautionary statements identifying important factors that could
cause our actual results to differ materially from those projected
in these forward-looking statements. Any statements that express,
or involve discussions as to, expectations, beliefs, plans,
objectives, assumptions or future events or performance (often, but
not always, through the use of words or phrases such as "will
likely result", "are expected to", "will continue", "is
anticipated", "projection", "vision", "goals", "objective",
"target", "schedules", "outlook", "anticipate", "expect",
"estimate", "could", "should", "plan", "seek", "may", "intend",
"likely", "will", "believe" and similar expressions) are not
historical facts and are forward looking. In particular, this press
release contains forward-looking statements with respect to, among
other things, completion of the Offering, use of net proceeds from
the Offering, terms of the Notes and anticipated benefits of
completing the Tender Offer and the Offering, the expected timing,
size or other terms of the Tender Offer, AutoCanada's ability to
complete the Tender Offer, the impact of recent working capital
initiatives and AutoCanada's financial results for Q4 2019.
The forward-looking statements included in this press release
are not guarantees of future performance and should not be unduly
relied upon. Readers are cautioned that forward-looking statements
are based on current expectations, estimates and projections that,
by their nature, forward-looking statements involve a number of
known and unknown risks and uncertainties, which could cause actual
results to differ materially from those anticipated and described
in the forward-looking statements. These known and unknown risks
and uncertainties include, but are not limited to: potential
changes in the regulatory and legislative environment; political
uncertainty and instability in North
America and internationally and changes in political
leadership in North America and
elsewhere; volatility in interest and tax rates; operating risks
inherent in the automotive retail industry; and changes in general
economic conditions including the capital and credit markets. The
existing credit facility must be amended to permit the completion
of a number of aspects of the refinancing transactions. There can
be no certainty that an agreement with AutoCanada's lenders will be
reached in this respect. If such an agreement is not reached, or
for another reason, some or all of the refinancing transactions do
not proceed, AutoCanada may be materially adversely impacted.
Forward-looking statements involve estimates and assumptions and
are subject to risks, uncertainties and other factors some of which
are beyond our control and difficult to predict. Accordingly,
actual results or outcomes may differ materially from those
expressed in the forward-looking statements. In particular, in
presenting its forward-looking statements, AutoCanada has made
assumptions respecting, among other things: the anticipated range
of interest rates that AutoCanada will be able to obtain for the
Notes; the relative stability of general North American economic
conditions; that AutoCanada will receive the approvals needed to
amend its existing credit facility and regulatory and legislative
conditions.
AutoCanada cautions that the foregoing list of assumptions,
risks and uncertainties is not exhaustive. The Company's Annual
Information Form and other documents filed with securities
regulatory authorities (accessible through the SEDAR website at
www.sedar.com) describe the risks, material assumptions and other
factors that could influence actual results and which are
incorporated herein by reference. The forward-looking statements
contained in this press release speak only as of the date hereof
and AutoCanada assumes no obligation to publicly update or revise
them to reflect new events or circumstances, except as may be
required pursuant to applicable securities laws.
Additional Information
Additional information about AutoCanada is available at the
Company's website at www.autocan.ca and www.sedar.com.
SOURCE AutoCanada Inc.