Case Study · High Yield Notes
Global Auto Refinances Lookers Acquisition Debt
$1.05bn Senior Unsecured Notes for M&A
January 2024
- On 1/11/24, Global Auto Holdings (GAH) priced a $1.05bn 2-part offering of $525mm each of 8.375% 5yr (non-call two) notes due 2029 and 8.75% 8yr (non-call three) notes due 2032
- The proceeds refinanced existing debt from GAH’s Oct-23 acquisition of Lookers and added cash to the balance sheet
- GAH is one of the largest global auto retailers, operating 179 franchised dealerships across eight countries, including the US, Canada, and the UK
- The bonds were marketed with 3Q23 Pro Forma Adj. EBITDA of $377mm (including cost savings), resulting in 2.8x total leverage
- The agencies used lower pro forma earnings and higher initial leverage than what was marketed to investors because prospective cost synergies were excluded
- S&P expects “adjusted debt to EBITDA will decline to about 4x area over the next couple of years” because of cost savings from the acquisition
| Final Terms | 2029 Notes | 2032 Notes |
|---|---|---|
| Pricing Date | January 11, 2024 | |
| Issuer | Global Auto Holdings and AAG FH UK | |
| Corporate Ratings | B+ / B1 | |
| Bond Ratings | B+ / B2 | |
| Issue | Senior Unsecured Notes | |
| Amount | $525mm | $525mm |
| MaturityCall | Jan 20295yr NC2 | Jan 20328yr NC3 |
| CouponSpread vs US Treasuries | 8.375%(T + 441 bps) | 8.750%(T + 474 bps) |
| Yield to Worst (8/6/26)Spread vs US Treasuries | 8.490%(T + 422 bps) | 9.340%(T + 493 bps) |
Ratings: S&P / Moody's at pricing.
Sources: Simpson Thacher announcement dated 1/23/24; TISE notice of admission dated 1/24/24
Case studies are prepared by Trackhawk Advisors from the sources cited on each page. They are for information only and are not investment advice or a recommendation to buy or sell any security.
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