American Tire Distributors (ATD) has closed the refinancing of its debt capital structure, including its existing asset-based line of credit facility, and replacement and issuance of a new Term Loan B.
ATD’s debt capital structure changes include amending and extending its asset-based lending facility with an expanded $1.2 billion asset-based line of credit maturing in five years, as well as a new term loan B maturing in seven years. Proceeds from the new issuance will be used to retire the company’s existing term and ABL facilities, ATD said.
ATD said the transaction reflects its financial momentum and progresses over the past several years delivering growth, solid cost and capital productivity and velocity, earnings growth, free cash flow generation and organic de-leveraging. This refinancing is enabled by the company’s ability to capitalize on attractive financial markets as well as the market recognition of the company’s strengthened financial position and performance, as evidenced by the recent ATD rating upgrades by Moody’s, Standard & Poor’s and initial coverage by Fitch Ratings, according to ATD.
“This is truly a milestone event for ATD, demonstrating increased confidence and support of our business within the investor community, and positioning ATD with a balance sheet and capital structure that sets the company up for continued success,” said Bill Williams, ATD’s chief financial officer. “Operating in an industry that continues to rapidly change and undergoing its own transformation, ATD will have a significantly strengthened financial profile that will benefit our entire business, including retail customers and tire manufacturer partners alike. This refinancing reflects our strong performance and positive momentum over the past several years and puts us on a strong trajectory to being able to strengthen partnerships that benefit the replacement tire industry today and into the future.”
ATD said the benefits of this transaction include an improved financial position for the company, including reducing the company’s capital costs, extending the maturity dates of its debt obligations and improved liquidity.
“The stability of our balance sheet provides the financial momentum needed to accelerate our strategic agenda,” said Stuart Schuette, ATD’s CEO and president. “This means allocating capital for organic growth opportunities, and value-creating strategic opportunities, as well. We will continue to grow our business by making investments in technologies that will enhance our capabilities in logistics and supply chain management.”
