On Feb. 3, 2015, American Tire Distributors Inc. (ATD) announced it intended to raise approximately $805 million in gross proceeds through an offering of senior subordinated notes due 2022. One week later on Feb. 10, the notes were offered.
On Feb. 25, 2015, the sale of the notes is expected to close.
ATD and its wholly owned subsidiary, ATD Finance Corp., entered into a purchase agreement "with the representative of certain initial purchasers relating to the issuance and sale of $805 million aggregate principal amount of the initial issuer's 10-1/4% Senior Subordinated Notes due 2022 to the initial purchasers," according to a Feb. 10 8-K report from the United States Securities and Exchange Commission.
The sale of the notes is expected to close on Feb. 25, 2015. If the closing of the previously announced transaction with a fund managed by the Private Equity Group of Ares Management LP also closes on February 25, 2015, the net proceeds from the offering of the notes will be used to:
* fund the redemption of all of ATD's outstanding 11.5% Senior Subordinated Notes due 2018;
* pay a cash dividend to the company to enable the company’s ultimate parent company (American Tire Distributors Holdings Inc.) to fund a cash dividend or other payment to certain of its securityholders and pay related fees and expenses.
If the closing of the Ares transaction does not occur on Feb. 25, then the proceeds from the offering of the notes, together with cash and cash equivalents sufficient to fund a special mandatory redemption and pay accrued and unpaid interest to, but excluding, Aug. 2, 2015, will be deposited into escrow, and pledged as security for so long as such amounts remain in escrow, for the benefit of the noteholders pursuant to the terms of an escrow agreement to be executed in connection with the closing of the notes.
Upon satisfaction of the escrow release conditions, including the satisfaction of all conditions to the closing of the Ares transaction, such amounts will be released from escrow and the net proceeds from the offering of the notes will be used as described above.
The offer and sale of the notes have not been registered under the Securities Act of 1933, and the notes may not be offered or sold in the U.S. absent registration or an applicable exemption from registration requirements.
