Item 1.01 Entry into a Material Definitive Agreement.
Purchase Agreement
On September 12, 2021, Group 1 Automotive, Inc., a Delaware corporation (the
"Company"), entered into a Purchase Agreement (the "Purchase Agreement") with
GPB Portfolio Automotive, LLC, a Delaware limited liability company, Capstone
Automotive Group, LLC, a Delaware limited liability company, Capstone Automotive
Group II, LLC, a Delaware limited liability company, Automile Parent Holdings,
LLC, a Delaware limited liability company, and Automile TY Holdings, LLC, a
Delaware limited liability company (each, a "Seller" and collectively, the
"Sellers"), and Prime Real Estate Holdings, LLC, a Delaware limited liability
company (the "Real Estate Equity Seller" and, together with the Sellers, the
"Seller Parties" and, together with their respective subsidiaries, the "Selling
Entities"). The Selling Entities, collectively, are engaged in the operation of
30 dealerships and 3 collision centers located in the Mid-Atlantic and New
England markets relating to (i) the sale and distribution of automobiles and
other related equipment, components, spare parts and accessories, (ii) repair
and maintenance services provided with respect to automobiles and related
activities, (iii) owning and leasing real estate to dealerships and (iv) owning
and operating collision centers (collectively, the "Business").
Pursuant to the Purchase Agreement, the Company will acquire substantially all
of the assets or equity of the Selling Entities, including, but not limited to,
the Selling Entities' real property, vehicles, parts and accessories, goodwill,
permits, intellectual property and substantially all contracts that relate to
the Business (collectively, the "Transaction"). The Company expects to pay a
purchase price of approximately $880 million, subject to customary adjustments
described in the Purchase Agreement (the "Purchase Price") and appropriate
reduction for any exercise of customary manufacturer rights of first refusal. At
the closing of the Transaction, $45 million of the Purchase Price will be
deposited into escrow as a contingent reserve to be used, if necessary, to
compensate the Company for any post-closing indemnifiable losses pursuant to the
terms of the Purchase Agreement, with 50% to be released to the Selling Entities
12 months after the closing of the Transaction and the remainder to be released
to the Selling Entities 24 months after the closing of the Transaction, subject
to pending claims, if any. The Purchase Price would be financed through a
combination of cash, available lines of credit and debt financing.
The Purchase Agreement contains customary representations and warranties made by
each of the parties, and the Company and the Seller Parties have agreed to
indemnify one another against certain damages, subject to certain exceptions and
limitations. The closing of the Transaction is subject to various closing
conditions, including a receipt of approval or expiration of the waiting period
required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the approval of a court-appointed monitor over an affiliate of the
Sellers. The closing of the Transaction is not conditioned upon the Company's
ability to obtain financing. The Purchase Agreement also contains certain
termination rights of the Company and the Sellers.
The Transaction will close no later than the 75th day after the date of the
Purchase Agreement, provided that the closing conditions are satisfied or
waived.
Debt Financing Commitment Letter
In connection with entering into the Purchase Agreement, the Company entered
into a commitment letter, dated September 12, 2021 (the "Commitment Letter"),
with Wells Fargo Bank, National Association ("Wells Fargo"), pursuant to which,
among other things, Wells Fargo has committed to provide a portion of the debt
financing for the Transaction, consisting of a $250 million unsecured bridge
loan (the "Bridge Facility"), on the terms and subject to the conditions set
forth in the Commitment Letter. The Bridge Facility is subject to mandatory
prepayment at 100% of the outstanding principal amount thereof with the net
proceeds from the issuance of any debt securities of the Company and upon other
specified events. The obligation of Wells Fargo to provide this debt financing
is subject to a number of customary conditions, including, without limitation,
execution and delivery of certain definitive documentation.
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The foregoing descriptions of the Purchase Agreement and the Commitment Letter
are a summary, which are qualified in their entirety by reference to the
Purchase Agreement and the Commitment Letter, copies of which will be filed with
the Company's next Quarterly Report on Form 10-Q.
Item 7.01 Regulation FD Disclosure.
On September 13, 2021, the Company issued a press release announcing the
Transaction, a copy of which is furnished herewith as Exhibit 99.1 and
incorporated herein by reference.
The information contained in this Item 7.01, including Exhibit 99.1, is being
furnished and shall not be deemed "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference
into any registration statement or other filing under the Securities Act of
1933, as amended, except as shall be expressly set forth by specific reference
to such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are furnished as part of this report.
Exhibit
Number Description
99.1 Press Release of Group 1 Automotive, Inc., dated September 13, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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