UnitedAuto Group has secured an additional $130 million to add to its existing credit facility, which now totals $706 million, to back acquisitions. "The company is in acquisitive mode. We just wanted to have the ability to pursue acquisitions as the opportunities come up," said Jim Davidson, v.p. of finance, adding that the company has no specific acquisitions in the works. He emphasized that the financing agreement is routine for the Detroit, Mich.-based company, which purchases new- and used-automobile dealerships throughout the country, with a heavy concentration in Detroit and Connecticut. Penske Corp., a controlling shareholder, made a $23 million investment in UnitedAuto in exchange for 2.1 newly-issued common shares at $10.75 per share. UnitedAuto operates 126 franchises in 17 states, Puerto Rico and Brazil. Davidson described the covenants as standard. The facility is set to expire in 2007.
Pricing is tiered at LIBOR plus 3% and LIBOR plus 2%. Davidson says the company has a bank group that provided the additional $130 million, but he declined to name the lead lenders. He said the size of the group did expand with the additional financing.