AutoCanada Announces Add-On Offering Of C$100M Senior Notes

On April 14, AutoCanada announced that it intends to offer an additional C$100 million aggregate principal amount of its existing 8.75% senior unsecured notes due 2025.

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AutoCanada (ACQ) has also amended and extended its existing credit facility for three years to 2024.

The company’s CFO Mike Borys said, “The strength of our balance sheet, our financial flexibility, our level of debt and our debt leverage will allow us to move forward confidently on acquisitions. Together with cash generated from strong earnings, as well as the C$50 million increase to our revolving facility, the add-on offering will allow us to grow the business as we move forward, while continuing to maintain strong discipline over our balance sheet.”

In addition, the automobile dealership group provided selected preliminary unaudited 2021 first quarter results. Revenue of approximately C$960 to C$980 million is expected, representing growth of approximately 36% year-over-year.

Paul Antony, Executive Chairman of AutoCanada, commented, “We are on track for another record quarter as our team’s relentless execution on daily actions and measures positions us to sustain top-tier operating performance. The strength of our operating platform and balance sheet has enabled us to continue to develop organically as well as to focus on an acquisition and innovation strategy. Given our strong business position and available market opportunities, we see significant opportunities to grow as an industry consolidator in both the short-term and long-term.” (See AutoCanada stock analysis on TipRanks)

Last month, Stifel Nicolaus analyst Maggie Macdougall reiterated a Buy rating on the stock with a C$48.00 price target (17% upside potential).

On an earnings conference call in March, Macdougall acknowledged the unique use of data analytics by the company in a way that the business had never used them before to create synergies between divisions.

Overall, consensus among Wall Street analysts is a Moderate based on 3 Buys and 2 Holds. The average analyst price target of C$38.00 implies downside potential of about 6% from current levels.