HUNTERSVILLE, N.C. — Three years after restructuring its debt and emerging from Chapter 11 bankruptcy protection, American Tire Distributors Inc. (ATD) has refinanced its debt capital structure in a bid to improve its financial position, including liquidity and reduce capital costs.
For the record, ATD's debt-capital structure refinancing includes its existing asset-based line of credit facility, as well as replacement and issuance of a new Term Loan B.
This transaction, ATD said, reflects the company's financial momentum and progress over the past several years delivering "top-line growth," solid cost and capital productivity and velocity, earnings growth, free cash-flow generation and organic de-leveraging.
ATD said this refinancing is enabled by its ability to capitalize on attractive financial markets as well as the market recognition of the company's strengthened financial position and performance. Moody's Investor Services and Standard & Poor's recently upgraded ATD's rating, and Fitch Ratings initiated coverage of the company.
ATD did not quantify the scale of savings the restructuring represents.
"This is truly a milestone event for ATD, demonstrating increased confidence and support of our business within the investor community, and positioning ATD with a balance sheet and capital structure that sets the company up for continued success," ATD's chief financial officer Bill Williams said.
"Operating in an industry that continues to rapidly change and undergoing its own transformation, ATD will have a significantly strengthened financial profile that will benefit our entire business, including retail customers and tire manufacturer partners alike.
"This refinancing reflects our strong performance and positive momentum over the past several years, puts us on a strong trajectory to being able to strengthen partnerships that benefit the replacement tire industry today and into the future."
ATD's debt capital structure changes include amending and extending its asset-based lending facility with an expanded $1.2 billion asset-based line of credit, maturing in five years as well as a new Term Loan B maturing in seven years. Proceeds from the new issuance will be used to retire the company's existing term and ABL facilities.
The benefits of this transaction include an improved financial position for ATD, including reducing the company's capital costs, extending the maturity dates of its debt obligations and improved liquidity.
"The stability of our balance sheet provides the financial momentum needed to accelerate our strategic agenda," ATD President and CEO Stuart Schuette said.
"This means allocating capital for organic growth opportunities, and value-creating strategic opportunities, as well. We will continue to grow our business by making investments in technologies that will enhance our capabilities in logistics and supply chain management.
"As a company," Mr. Schuette added, "we are making tremendous progress to lead the pace of change in the automotive aftermarket industry. We remain focused on growing our business and rolling out new tools and capabilities to help our customers, and our associates, be more successful. We have our associates to thank for helping ATD make significant strides in driving our transformation and strategy forward."
Huntersville-based ATD is considered one of the largest independent tire wholesalers in North America, with more than 130 distribution centers, including 24 in Canada, serving approximately 80,000 customers throughout the U.S. and Canada.