KAR Auction Services said Monday that it is seeking amendments to its credit agreement, dated as of May 19 of last year.
The company explained that amendments to the credit agreement would provide KAR with greater flexibility, including modifications to increase the amount of restricted payments that are, among other things, dividends, stock buybacks and other payments made in respect of the company’s equity securities.
KAR indicated obtaining the proposed amendments requires the consent of a majority of the lenders under the credit agreement.
“We cannot assure that we will receive the requisite lender consent to approve the proposed amendments,” company officials said. “Moreover, if the proposed amendments are obtained, there are no assurances as to the amount, timing or whether the company will in fact make any restricted payments in the future.”
When KAR reported its third-quarter financial statement earlier this month, chief financial officer Eric Loughmiller noted the company’s available cash as of Sept. 30 was $130.5 million. The company’s consolidated net leverage ratio stood at 3.5 times.
“And we have generated $203 million of free cash flow in the first nine months of 2012. We are very proud of this performance,” Loughmiller said. “We continue to be pleased with our cash generation, which has been consistently improving over the last several years.”