Lithia & Driveway (LAD) Announces Upsizing And Pricing Of Senior Notes Offering

Rhea-AI Summary

Lithia & Driveway (NYSE: LAD) has announced the pricing of its senior notes offering, which has been upsized by $100 million to $600 million. The notes will carry a 5.500% interest rate and are due in 2030.

The private offering is expected to close on September 10, 2025. The company plans to use the proceeds to repay a portion of its outstanding revolving lines of credit, with the possibility of reborrowing for general corporate purposes, including acquisitions and working capital.

The notes will be offered exclusively to qualified institutional buyers in the U.S. under Rule 144A and to international investors under Regulation S of the Securities Act.

Positive

• Successful upsizing of notes offering by $100 million to $600 million total
• Proceeds will provide financial flexibility by paying down revolving credit lines
• Ability to reborrow funds for strategic acquisitions and working capital

Negative

• Additional long-term debt with 5.500% interest rate increases financial obligations
• Potential increase in interest expenses could impact future cash flows

Insights

Corporate Finance Specialist

LAD successfully upsized its debt offering by $100M, indicating strong investor demand while restructuring its debt profile.

Lithia & Driveway has priced $600 million in senior notes at a 5.500% interest rate due in 2030, representing a $100 million increase from their previously announced offering size. This upsizing suggests strong institutional investor demand for the company's debt, which is a positive signal regarding market confidence in LAD's creditworthiness.

The company intends to use these proceeds to repay a portion of its revolving credit lines, effectively refinancing short-term debt with longer-term financing. This strategic debt restructuring extends LAD's debt maturity profile to 2030, potentially reducing near-term refinancing pressure and improving financial flexibility. The ability to reborrow these amounts provides LAD with enhanced liquidity for future acquisitions and working capital needs.

The 5.500% interest rate indicates relatively favorable financing terms in the current rate environment, though not exceptionally low by historical standards. The private placement approach through Rule 144A and Regulation S exemptions is typical for corporate debt issuances, allowing the company to avoid some of the regulatory burdens of a public offering while still accessing institutional capital.

This debt management strategy aligns with LAD's active acquisition-based growth model in the auto dealership sector, ensuring they maintain financial flexibility to continue their expansion strategy while managing their overall leverage position.

MEDFORD, Ore., Sept. 3, 2025 /PRNewswire/ -- Lithia & Driveway (NYSE: LAD) today announced the pricing of $600 million in aggregate principal amount of its 5.500% senior notes due 2030 (the "Notes") in a private offering (the "Private Offering"), which represents an increase of $100 million from the offering size previously announced. The Private Offering is expected to close on September 10, 2025, subject to customary closing conditions. Lithia intends to use the net proceeds of the Private Offering to repay a portion of the borrowings outstanding under its revolving lines of credit. Such amounts may be reborrowed and used for general corporate purposes, including acquisitions and working capital.

The Private Offering is exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). The Notes will be offered and sold only to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act and outside the United States pursuant to Regulation S under the Securities Act. The Notes have not been, and will not be, registered under the Securities Act, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder.

This press release is being issued pursuant to Rule 135c under the Securities Act, and is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About Lithia & Driveway (LAD)

Lithia & Driveway (NYSE: LAD) is the largest global automotive retailer providing a wide array of products and services throughout the vehicle ownership lifecycle. Simple, convenient, and transparent experiences are offered through our comprehensive network of physical locations, e-commerce platforms, captive finance solutions, fleet management offerings, and other synergistic adjacencies. We deliver consistent, profitable growth in a massive and unconsolidated industry. Our highly diversified and competitively differentiated design provides us the flexibility and scale to pursue our vision to modernize personal transportation solutions wherever, whenever and however consumers desire.

Forward-Looking Statements

Certain statements in this press release, and at times made by our officers and representatives, constitute forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Generally, you can identify forward-looking statements by terms such as "project", "outlook", "target", "may", "will", "would", "should", "seek", "expect", "plan", "intend", "forecast", "anticipate", "believe", "estimate", "predict", "potential", "likely", "ensure," "goal", "strategy", "future", "maintain", and "continue" or the negative of these terms or other comparable terms. Examples of forward-looking statements in this press release include, among others, statements regarding the Private Offering.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements in this press release. Therefore, you should not rely on any of these forward-looking statements. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation:

• Future national and local economic and financial conditions, including as a result of inflation, governmental programs and spending, and public health issues;
• The market for dealerships, including the availability of stores to us for an acceptable price;
• Changes in customer demand and the electric vehicle landscape and the impact of evolving digital technologies;
• Changes in our relationship with, and the financial and operational stability of, OEMs and other suppliers, and vehicle delivery models;
• Changes in the competitive landscape, including through technology and our ability to deliver new products, services and customer experiences and a portfolio of in-demand and available vehicles;
• Risks associated with our indebtedness, including available borrowing capacity, interest rates, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms;
• The adequacy of our cash flows and other conditions which may affect our ability to fund capital expenditures, obtain favorable financing and pay our quarterly dividend at planned levels;
• Disruptions to our technology network including computer systems, as well as natural events such as severe weather or man-made or other disruptions of our operating systems, facilities or equipment;
• Government regulations and legislation; and
• The risks set forth throughout "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and in "Part I, Item 1A. Risk Factors" of our most recent Annual Report on Form 10-K, and in "Part II, Item 1A. Risk Factors" of our Quarterly Reports on Form 10-Q, and from time to time in our other filings with the SEC.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by law, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

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SOURCE Lithia Motors, Inc.

FAQ

What is the size and interest rate of Lithia & Driveway's (LAD) new senior notes offering?

Lithia & Driveway's senior notes offering is sized at $600 million with an interest rate of 5.500%, due in 2030. This represents a $100 million increase from the initially announced amount.

When will LAD's senior notes offering close?

The private offering is expected to close on September 10, 2025, subject to customary closing conditions.

How will Lithia & Driveway use the proceeds from the senior notes?

LAD will use the proceeds to repay a portion of its revolving lines of credit. The company may reborrow these amounts for general corporate purposes, including acquisitions and working capital.

Who can purchase LAD's new senior notes?

The notes are only available to qualified institutional buyers in the United States under Rule 144A and to international investors under Regulation S of the Securities Act.

Are LAD's new senior notes registered under the Securities Act?

No, the notes have not been and will not be registered under the Securities Act or any state securities laws. They are being offered through an exemption from registration requirements.