Item 1.01 – Entry into a Material Definitive Agreement.
Indenture
On October 21, 2021, Group 1 Automotive, Inc. (the “Company”) completed a private offering (the “Offering”) of an additional $200,000,000 aggregate principal amount of its 4.000% Senior Notes due 2028 (the “New Notes”). The New Notes were sold to investors at an offering price of 100.25% of the principal amount with an effective yield to maturity of approximately 3.957%. The New Notes are guaranteed on an unsecured senior basis (the “Guarantees”) by certain of the Company’s subsidiaries (collectively, the “Guarantors”).
The New Notes were issued as additional notes under the indenture dated August 17, 2020 (the “Indenture”), entered into among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee, pursuant to which the Company issued $550 million in aggregate principal amount of its 4.000% senior unsecured notes due 2028 (the “Initial Notes” and, together with the New Notes, the “Notes”). The New Notes have identical terms as the Initial Notes, other than the issue date, and the New Notes and the Initial Notes will be treated as a single class of securities under the Indenture.
The Notes will mature on August 15, 2028, and interest is payable on the Notes on each February 15 and August 15. Interest on the New Notes will accrue from August 15, 2021, and the first interest payment date will be February 15, 2022. The Company may redeem up to 40% of the original principal amount of the Notes using the proceeds of certain equity offerings completed on or before August 15, 2023 at a redemption price of 104.000% of the principal amount of the Notes, together with accrued and unpaid interest, if any, to, but excluding, the date of redemption, provided that:
(i) at least 60% of the aggregate principal amount of all Notes issued remains outstanding after each such redemption; and
(ii) the redemption occurs within 120 days of the date of the closing of such equity offering.
Prior to August 15, 2023, the Company may redeem all or a part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed plus an applicable make-whole premium as of, and accrued and unpaid interest, if any, on the Notes redeemed to, the applicable date of redemption.
On or after August 15, 2023, the Company may on any one or more occasions redeem all or a part of the Notes at the following redemption prices (expressed as percentages of the principal amount) plus accrued and unpaid interest, if any, on the Notes redeemed, to, but excluding, the applicable redemption date, if redeemed during the 12-month period beginning on August 15 of the years indicated:
| | | | |
| Year | | Percentage | |
2023 | | | 102.000 | % |
2024 | | | 101.333 | % |
2025 | | | 100.667 | % |
2026 and thereafter | | | 100.000 | % |
Upon the occurrence of a Change of Control (as defined in the Indenture), the Company will be required to make an offer to purchase all outstanding Notes at a purchase price equal to 101% of their principal amount plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.
The Notes are the Company’s senior unsecured obligations and will rank: (i) equal in right of payment with all existing and future senior unsecured indebtedness of the Company; (ii) effectively subordinated to all existing and future senior secured debt of the Company to the extent of the value of the assets securing such debt; (iii) senior in right of payment to all existing and future subordinated indebtedness of the Company; and (iv) structurally subordinated to all existing and future liabilities (including trade payables) of any non-guarantor subsidiaries. The Note Guarantees will rank equally in right of payment with all of the Guarantor’s existing and future senior indebtedness and senior in right of payment to all of the Guarantor’s existing and future subordinated indebtedness.
