Summary
O'Reilly Automotive, Inc. (ORLY) filed an 8-K on July 15, 2008, reporting on significant financing activities that occurred on July 11, 2008. The company entered into a new five-year, $1.2 billion asset-based senior secured credit facility with Bank of America, N.A. This facility is comprised of a $1.075 billion tranche A revolving credit facility and a $125 million first-in-last-out (FILO) revolving credit facility, both subject to borrowing base limitations on eligible accounts receivable, inventory, and real estate. The primary purpose of this new credit facility is to fund a portion of the cash consideration for the acquisition of all outstanding shares of CSK common stock, refinance existing O'Reilly and CSK debt, cover associated fees and expenses, and support the working capital needs of the combined entity. The FILO tranche, in particular, offers a higher interest rate, reflecting its senior position in the capital structure.
Key Highlights
- 1O'Reilly Automotive entered into a new $1.2 billion, 5-year senior secured credit facility on July 11, 2008.
- 2The credit facility includes a $1.075 billion tranche A revolving credit facility and a $125 million FILO revolving credit facility.
- 3Proceeds from the credit facility are intended to finance the acquisition of CSK, refinance debt, and support general corporate purposes.
- 4Borrowings under the tranche A revolver will bear interest at either a base rate + 1.50% or LIBOR + 2.5%, subject to adjustments.
- 5Borrowings under the FILO tranche will bear interest at either a base rate + 2.75% or LIBOR + 3.75%, subject to adjustments.
- 6The credit facility is secured by substantially all tangible and intangible assets of O'Reilly and its domestic subsidiaries.
- 7O'Reilly also agreed to guarantee, on a subordinated basis, CSK's 6.75% Exchangeable Senior Notes due 2025.
- 8The agreement to guarantee CSK's notes is part of the broader transaction and ensures exchangeability into O'Reilly's stock or cash consideration related to the merger.