Lithia Motors hit the bank market for some fall cleaning to better organize its debt lines. The company took out a new $225 million credit facility in September with relationship banks US Bank, DaimlerChrysler Financial Services and Toyota Financial Services.
"The lenders are all existing lenders that we've had but they all had separate facilities," said Jeff DeBoer, cfo. He explained that the company wanted all of its loans rolled into one. "It was a consolidation of collateral - it was almost like housekeeping."
The Medford, Ore.-based company had a $200 million facility with DaimlerChrysler Financial and Toyota Financial used for acquisitions and working capital, as well as a separate facility of an indeterminable amount from US Bank for equipment purchases. "It was a cheaper facility. We were able to lower the rates and some fees," DeBoer said, but declined to comment on pricing of the new facilities.
He explained that Lithia chose US Bank because of its existing relationship. "We wanted US Bank to be the lead" on the consolidated facility, DeBoer said. "They really have the systems and skills to be a syndication lead." Although US Bank was on the left, each bank had a $75 million stake. "We really didn't add any new lenders we have a very good relationship with [the banks]."
The auto sales company also chose to increase the facility by $25 million. "We're growing bigger. We're an acquisition based company we acquire stores and operate them," DeBoer said. "We need capital to fund these acquisitions." The company's most recent acquisitions were in June and included TradeMark Chrysler Jeep Dodge in Bryan-College Station, Texas and Eversole Motors in La Crosse, Wis. DeBoer also said the company plans to further fund and expand its used car dealerships but would not comment on any specific plans.