CHARLOTTE, N.C.—ATD Corp., parent of American Tire Distributors Holdings Inc., is proposing an initial public offering (IPO) of its common stock, although details such as number of shares, pricing, etc., have not yet been disclosed. ATD said in a June 16 filing with the U.S. Securities and Exchange Commission (SEC) it expects to use the net proceeds from the offering primarily to repay a portion of its existing long-term debt.
The distributor has designated BofA Merrill Lynch, Deutsche Bank Securities and Goldman, Sachs & Co. as joint book-running managers and as representatives of the underwriters for the offering. In addition, Barclays, J.P. Morgan and UBS Investment Bank are joint book-running managers for the offering. A registration statement relating to these securities has been filed with the SEC but has not yet become effective, ATD said.
These securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective, according to the Charlotte-based company. ATD is owned by affiliates of global investment firm TPG Capital L.P., which paid approximately $1.3 billion for ATD in June 2010.
TPG's purchase trumped an IPO ATD had been planning at the time. TPG bought ATD from affiliates of Investcorp Bank BSC, Berkshire Partners L.L.C. and Greenbriar Equity Group L.L.C., which paid about $500 million for the company.
TPG is expected to continue to be a shareholder in ATD following the IPO, ATD said in its filing, and will continue to have “significant influence over us and decisions made by stockholders and may have interests that differ from yours.” TPG ultimately will determine how much of ATD's stock it chooses to hold.
The offering will be made only by means of a prospectus, the company said. Copies of the preliminary prospectus related to the offering may be obtained, when avail-able, from: cBofA Merrill Lynch, 222 Broadway, New York, NY 10038, Attention: Prospectus Department, or via email, at [email protected]; c Deutsche Bank Securities, Attention: Prospectus Group, 60 Wall Street, New York, NY 10005, via telephone: 1-800-503-4611 or via email: [email protected]; or c Goldman, Sachs & Co., Attention: Prospectus Department, 200 West Street, New York, NY 10282, or by telephone at 866-471-2526, facsimile at 212-902-9316, or e-mail at [email protected]
ATD is acknowleged to be the largest distributor of replacement tires in North America, with $3.84 billion in sales last year. However, the Charlotte-based firm reported a net loss of $6.33 million. ATD claims an estimated U.S. replacement market share of 14 percent and an 18-percent share of the Canadian passenger and light truck tire replacement market, distributing tires, wheels and other parts to 80,000 customers in the two countries through more than 140 distribution centers. That scale of business equates to 40 million tires distributed, ATD said.
In the quarter ended April 5, ATD reported operating and net losses of $24.4 million and $34 million, respectively, on 28-percent higher sales of $1.08 billion. The IPO filing is in addition to a May 16 “Notice of Full Redemption” filing by American Tire Distributors Inc. providing for the redemption of all $250 million aggregate principal amount of its 9.75-percent senior secured notes on June 16.
ATD redeemed the notes at a price equal to 104.875 percent of the principal amount of the notes plus accrued and unpaid interest, or a total of $263.2 million.
At the same time, ATD amended a $300 million term loan it had secured in connection with its acquisition of Terry's Tire Town Holdings Inc. in March, exercising options to secure up to $420 million more at the same terms as originally negotiated. ATD used this credit line to pay off the senior secured notes.