AAP inks five-year $1.0B asset-based revolver; borrowing base and pricing detailed

Rhea-AI Filing Summary

Advance Auto Parts, Inc. entered into a new five-year senior secured first-lien asset-based revolving credit facility providing up to $1.0 billion of commitments, subject to a borrowing base. The facility is secured by substantially all accounts receivable, inventory, certain deposit accounts and related assets, and is guaranteed by subsidiaries that guarantee the company’s recent senior notes and certain Canadian subsidiaries.

The borrowing base is calculated using specified advance rates (90% of eligible credit card receivables, 85% of eligible trade receivables, 85% of eligible inventory liquidation value and 100% of qualified cash subject to limits) and customary reserves. Interest margins range from SOFR+1.25%–1.75% or alternate base rate + 0.25%–0.75%, with unused commitment fees of 0.25%–0.30%. The company also furnished a press release reporting its second-quarter financial results as an exhibit to the report.

Positive

• $1.0 billion five-year senior secured ABL provides a defined source of revolving liquidity
• Facility is secured by core operating assets (accounts receivable, inventory, deposit accounts), aligning lender collateral with company working capital
• Borrowing base explicitly includes qualified cash (partially funded from recent senior notes) as initial availability
• Interest pricing tied to market benchmarks (SOFR or alternate base rate) with transparent margin ranges (SOFR+1.25%–1.75%)

Negative

• Availability is subject to a borrowing base with customary reserves (including supply chain and debt maturity reserves) that can materially reduce capacity
• Presence of a springing 1:1 fixed charge coverage ratio covenant and cross-default provisions could restrict borrowings under adverse conditions
• Qualified cash held under control agreements and a dominion trigger may limit access to designated cash if excess availability metrics deteriorate

Insights

Financial Analyst

TL;DR: The $1.0B five-year ABL materially increases secured liquidity and ties borrowing capacity to a well-defined collateral borrowing base.

The facility provides up to $1.0 billion of revolver capacity with a first-lien on receivables, inventory and certain deposit accounts, enhancing near-term liquidity profile. The borrowing base uses conservative advance rates and allows inclusion of qualified cash from the recent senior notes offering, which was designated to the initial borrowing base. Pricing is tied to SOFR or an alternate base rate with modest unused fees, and customary reserves and a dominion trigger could reduce availability. Overall, this is a material financing action that formalizes secured liquidity under standard ABL mechanics.

Risk Analyst

TL;DR: The agreement contains customary but potentially restrictive covenants and springing triggers that may constrain availability under stress.

The ABL includes customary limitations on indebtedness, liens and restricted payments, and a springing 1:1 fixed charge coverage ratio covenant that can limit draws if coverage falls. Supply chain and debt-maturity reserves, qualified cash dominion triggers and control agreements also introduce operational conditions that can reduce access to borrowing capacity. These provisions are standard for ABLs but are material for liquidity planning and covenant compliance monitoring.

0001158449false00011584492025-08-122025-08-12

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

 CURRENT REPORT

 Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 Date of Report (Date of earliest event reported): August 12, 2025

ADVANCE AUTO PARTS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware			001-16797			54-2049910
(State or other jurisdiction of incorporation)			(Commission File Number)			(I.R.S. Employer Identification No.)

4200 Six Forks Road, Raleigh, North Carolina 27609

(Address of principal executive offices) (Zip Code)

(540) 362-4911

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $0.0001 par value

AAP

New York Stock Exchange

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

INFORMATION TO BE INCLUDED IN THE REPORT

Item 1.01 Entry into a Material Definitive Agreement.

On August 12, Advance Auto Parts, Inc. entered into a new five year senior secured first lien asset based revolving credit facility (the “ABL Facility”) with Bank of America, N.A. as Administrative Agent and lead arranger and the several other lead arrangers and lenders party thereto. The ABL Facility provides for extensions of credit of up to $1.0 billion, subject to a borrowing base thereunder. The ABL Facility has a first lien on substantially all the accounts receivable, inventory, certain deposit accounts and certain related assets of the borrower and guarantors thereunder. Advance Auto Parts, Inc. is the ABL Facility borrower and the guarantors are (i) each of our subsidiaries that guarantee our recently issued senior notes and (ii) certain of our Canadian subsidiaries.

The ABL Facility contains customary covenants limiting indebtedness, liens and restricted payments and customary events of default, including non-payment defaults, covenant defaults and cross-defaults of our other material indebtedness. The ABL Facility also has a customary 1:1 “springing” fixed charge coverage ratio covenant. Our ability to borrow and obtain letters of credit under the ABL Facility is limited to the lesser of (i) the borrowing base, equal to the sum of 90% of eligible credit card receivables, 85% of eligible trade accounts receivable, 85% of the net orderly liquidation value of eligible inventory and 100% of qualified cash (up to certain limits for the purpose of determining borrowing capacity), subject, in each case, to customary reserves established by the collateral agent under the ABL Facility from time to time, including supply chain financing reserves and debt maturity reserves, and (ii) the aggregate revolving credit commitments. A portion of the net proceeds from our recent senior notes offering, together with cash on hand, was designated as qualified cash to the initial borrowing base for the ABL Facility and will be held in deposit accounts subject to customary “springing” control agreements. In addition, the ABL Facility includes a customary qualified cash dominion trigger based on, among other things, excess availability. Interest on the loans under the ABL Facility will be calculated by reference to SOFR or an alternate base rate plus an interest rate margin of between 1.75% and 1.25% per annum (for SOFR loans) or between 0.75% and 0.25% per annum (for alternate base rate loans) based on average daily excess availability. Unused commitments under the ABL Facility will accrue an unused commitment fee of either 0.30% or 0.25% per annum, depending on average utilization.

The foregoing descriptions are summaries of the material terms of these agreements and are not complete and are subject to, and qualified in their entirety by, the complete text of these agreements which are filed with this Current Report on Form 8-K as Exhibits 10.1, each of which is incorporated by reference in this Item 1.01.

Item 2.02 Results of Operations and Financial Condition.

On August 14, 2025, Advance Auto Parts, Inc. (the "Company") issued a press release setting forth its financial results for its second quarter ended July 12, 2025. The press release is furnished as Exhibit 99.1 to this Report and is hereby incorporated by reference in this Item 2.02.

As provided in General Instruction B.2 of Form 8-K, the information and exhibit contained in this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.			Exhibit Description
10.1			Credit Agreement, dated August 12, 2025 among Advance Auto Parts, Inc., each of the subsidiary guarantors party thereto and Bank of America, N.A., as Administrative Agent.
99.1			Press Release, dated August 14, 2025, issued by Advance Auto Parts, Inc.
101.1			Pursuant to Rule 406 of Regulation S-T, the cover page to this Current Report on Form 8-K is formatted in Inline XBRL.
104.1			Cover Page Interactive Data File (embedded within the Inline XBRL document included in Exhibit 101.1)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

						ADVANCE AUTO PARTS, INC.
August 14, 2025						/s/ Ryan P. Grimsland
						Ryan P. Grimsland
						Executive Vice President, Chief Financial Officer

FAQ

What did Advance Auto Parts (AAP) announce in this 8-K?

The company entered into a new five-year senior secured first-lien asset-based revolving credit facility providing up to $1.0 billion of commitments and furnished a press release with its second-quarter results as an exhibit.

How is the borrowing base for AAP's ABL Facility calculated?

The borrowing base equals the sum of 90% of eligible credit card receivables, 85% of eligible trade receivables, 85% of net orderly liquidation value of eligible inventory and 100% of qualified cash (subject to limits and customary reserves).

What collateral and guarantors support AAP's new ABL Facility?

The ABL has a first lien on substantially all accounts receivable, inventory, certain deposit accounts and related assets, and is guaranteed by subsidiaries that guarantee the company's recent senior notes and certain Canadian subsidiaries.

What are the pricing terms and fees for the ABL Facility?

Interest margins range from SOFR+1.25%–1.75% for SOFR loans and alternate base rate+0.25%–0.75% for alternate base rate loans; unused commitment fees are 0.25%–0.30% per annum depending on utilization.

Does the ABL include any covenants or trigger provisions?

Yes; it contains customary covenants limiting indebtedness, liens and restricted payments, customary events of default, a springing 1:1 fixed charge coverage ratio covenant and a qualified cash dominion trigger tied to excess availability.