AutoCanada Increases Floorplan Facility to Make Way for Expansion
It’s been a big week for AutoCanada. In time with the company revealing it is in the process of adding eight new dealership to its lineup, the dealer group also recently announced it has increased its floor plan credit facility to $550 million.
This marks an increase of $200 million to its existing syndicated floorplan facility it holds with ScotiaBank and The Canadian Imperial Bank of Commerce. All significant terms and conditions of the previous facility remain unchanged, the company said.
Chairman and chief executive officer Pat Priestner explained the move was, not surprisingly, due to the company’s intended expansion.
"Earlier this year, the company announced its intention to acquire an increased number of dealerships over the next two years. Recognizing the increased need for inventory financing associated with a higher rate of growth, Scotiabank, as lead syndicate partner and agent, approved a $200 million increase to the floorplan facility to a total of $550 million in availability. We are extremely pleased to be partnered with Scotiabank and CIBC and would like to give recognition to these two financial institutions for their continued support of our growth strategy and the inherent confidence they have in the future of AutoCanada," Priestner said.
The company revealed this week a series of purchases that have the potential to make the company more than $400 million in extra annual revenue.
AutoCanada has signed a purchase agreement for a dealer group, as well as purchase agreements for additional unrelated dealerships outside of the dealer group.
In total, AutoCanada has executed purchase agreements for eight dealerships, which the company expected to close at various times during the next 90 days.
Click here for more information on AutoCanada’s recent purchase agreements.
In other company news, AutoCanada also reported a change to the Chrysler Canada minimum ownership requirement for CanadaOne Auto Group (CAG) — another company controlled by AutoCanada chairman and chief executive officer Pat Priestner.
Chrysler Canada has reduced the minimum equity interest that it requires CAG to hold in AutoCanada until Jan. 1, 2015, to a 5 percent equity interest.
Previously CAG was required to maintain a minimum 20 percent equity interest until Jan. 1, 2015, at which time the minimum ownership requirement would expire, company officials explained.
"Although the minimum equity interest requirement would have expired at year-end in any event, the company appreciates Chrysler Canada accommodating us in providing this additional flexibility and capacity regarding our financing alternatives during the remaining months of 2014, enabling us to take advantage of continued strength of our deal pipeline,” Priestner said.