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LKQ Corporation Announces Pricing of €750,000,000 Senior Notes

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LKQ Corporation, along with its subsidiary LKQ Dutch Bond B.V., announced the pricing of €750,000,000 senior notes due 2031. The offering is a significant move in the company's financial strategy.
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The announcement by LKQ Corporation regarding the pricing of a €750 million senior notes offering at a 4.125% interest rate due in 2031 is a significant financial event that merits close examination. This action suggests a strategic move to bolster the company's long-term financial position, potentially for growth initiatives, refinancing existing debt, or other corporate purposes.

From a financial perspective, the interest rate of 4.125% needs to be evaluated against the current market conditions and the company's creditworthiness. If this rate is below the average for similar corporate issuances, it indicates investor confidence in LKQ's financial stability and future performance. Conversely, a higher rate might imply a risk premium associated with the company. The decision to issue debt also impacts the company's leverage ratios, which are crucial indicators of financial health.

Moreover, the use of the proceeds is a critical factor. If the funds are allocated towards high-return projects or refinancing higher-interest debt, the impact on LKQ's balance sheet and future earnings could be positive. However, if the capital is not deployed effectively, it could lead to an increase in financial risk without corresponding returns.

Examining the broader market implications of LKQ Corporation's senior notes offering, it is important to consider the investor appetite for corporate bonds within the automotive aftermarket industry. The success of such an offering can be indicative of the market's view on the industry's growth prospects and stability. A successful closing of the offering could signal to other market participants that there is liquidity and interest in the sector, potentially influencing other companies' financing strategies.

Furthermore, the size of the offering at €750 million is substantial and could affect the supply-demand dynamics in the European corporate debt market. If the offering is oversubscribed, it demonstrates strong market demand, which could lead to tighter spreads for LKQ's bonds and potentially for similar issuers in the industry. Investors will also be watching for the performance of these notes post-issuance as a barometer for the sector's creditworthiness.

From an economic standpoint, LKQ Corporation's decision to enter the debt market with a substantial offering can be influenced by macroeconomic factors such as interest rates, inflation and economic growth forecasts. The fixed interest rate of 4.125% locks in the company's borrowing costs, which can be advantageous in an environment where rates are expected to rise. This move could be seen as a hedge against future economic uncertainty or inflationary pressures.

Additionally, the injection of €750 million into LKQ's operations may have a multiplier effect on the economy, particularly if the funds are used for expansionary activities that increase production, employment, or technological advancements. The long-term nature of the debt also provides a stable source of capital, which is vital for sustained economic growth. However, the increased debt load must be managed prudently to avoid financial distress that could have broader economic implications.

CHICAGO, Feb. 28, 2024 (GLOBE NEWSWIRE) -- LKQ Corporation (Nasdaq: LKQ), together with its indirect, wholly-owned subsidiary, LKQ Dutch Bond B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of The Netherlands (“LKQ Finance”) announced today that it has priced an offering by LKQ Finance of €750,000,000 aggregate principal amount of 4.125% senior notes due 2031 (the “notes”). The offering is expected to close on or about March 13, 2024, subject to the satisfaction of customary closing conditions.

The joint book-running managers for the offering are BofA, HSBC, Wells Fargo, BNP Paribas, MUFG and UniCredit.

The notes will be fully and unconditionally guaranteed on a senior unsecured basis by the Company and certain of the Company’s U.S. subsidiaries (the “guarantees”). LKQ Finance intends to use the net proceeds from the offering of the notes, together with cash on hand, to (i) pay outstanding indebtedness, including the redemption of all of the outstanding €500,000,000 aggregate principal amount of the 3.875% senior notes due 2024 issued by the Company’s indirect wholly-owned subsidiary, LKQ Italia Bondco di LKQ Italia Bondco GP S.r.l e C.S.A.P.A. (f/k/a LKQ Italia Bondco S.p.A.) and (ii) pay accrued interest and related fees, premiums and expenses.

The Company has filed a registration statement (including a prospectus and related preliminary prospectus supplement for the offering) with the U.S. Securities and Exchange Commission (the “SEC”) for the offering to which this communication relates. Before you invest, you should read the preliminary prospectus supplement, the accompanying prospectus in that registration statement and the other documents the Company has filed with the SEC for more complete information about the Company and this offering. You may get these documents for free by visiting EDGAR on the SEC’s website at www.sec.gov. Alternatively, the Company, any underwriter or any dealer participating in the offering will arrange to send you the preliminary prospectus supplement and the accompanying prospectus if you request if by contacting BofA Securities Europe S.A. at +33(0) 1 8770 0000, HSBC Continental Europe at +1 (866) 811-8049 and Wells Fargo Securities Europe S.A. at +33 (0) 1 85 14 06 62.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the notes, and shall not constitute an offer, solicitation or sale of such notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About LKQ Corporation

LKQ Corporation (www.lkqcorp.com) is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. LKQ has operations in North America, Europe and Taiwan. LKQ offers its customers a broad range of OEM recycled and aftermarket parts, replacement systems, components, equipment, and services to repair and accessorize automobiles, trucks, and recreational and performance vehicles.

Forward-Looking Statements

Certain statements in this press release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally include expectations, beliefs, hopes, intentions or strategies regarding our future, including with respect to the pending offering of the notes, our ability to complete such offering and our intentions with regard to the use of the net proceeds from the offering. Forward-looking statements are subject to risks, uncertainties and other factors some of which are not currently known to us. Actual events or results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors. Some of such risks, uncertainties and other factors are described in our Form 10-K for the year ended December 31, 2023, and in other documents we file with the SEC from time to time. We assume no obligation to publicly update any forward-looking statement to reflect events or circumstances arising after the date on which it was made, except as required by law.

Contact:
Joseph P. Boutross – Vice President, Investor Relations
LKQ Corporation
(312) 621-2793
jpboutross@lkqcorp.com


FAQ

What did LKQ Corporation announce?

LKQ Corporation announced the pricing of €750,000,000 senior notes due 2031 through its subsidiary LKQ Dutch Bond B.V.

What is the aggregate principal amount of the notes?

The aggregate principal amount of the notes is €750,000,000.

When is the offering expected to close?

The offering is expected to close on or before the specified date.

What is the interest rate on the senior notes?

The senior notes carry an interest rate of 4.125%.

LKQ Corporation

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Motor Vehicle Body Manufacturing
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United States of America
CHICAGO