Car-Mart sells $400 million in asset-backed notes

by Jeff Della Rosa ([email protected]) 967 views 

Rogers-based America’s Car-Mart Inc. recently sold $400.19 million in asset-backed notes, according to a Monday (Feb. 6) filing with the U.S. Securities and Exchange Commission. The $398.2 million in net proceeds from the offering will be used to pay debt and for the initial deposits for noteholders’ accounts.

The Jan. 31 securitization transaction involved the issuance and sale in a private offering of $230.39 million of 6.61% class A asset-backed notes, $46.8 million of 7.26% class B asset-backed notes, $74.1 million of 8.59% class C asset-backed notes and $48.9 million of 12.58% class D asset-backed notes. ACM Auto Trust, an indirect Car-Mart subsidiary, issued the notes.

The collateral for the notes comprises Car-Mart’s loans. To complete the transaction, company subsidiary, Colonial Auto Finance Inc., sold or conveyed the loans to ACM Funding LLC, an indirect company subsidiary. The loans were then sold to ACM Auto Trust under a Jan. 31 agreement between Car-Mart and trustee Wilmington Trust, National Association. Car-Mart is responsible for servicing the loans and will receive a monthly service fee of 4%, based on the loan balance.

Under an agreement with Wilmington Trust, ACM Auto Trust will pay interest and principal on the notes monthly, starting Feb. 21. The notes mature on Jan. 22, 2030.

The notes were initially sold to Credit Suisse Securities LLC and BMO Capital Markets Corp. before being resold to “qualified institutional buyers,” according to the federal filing.

S&P Global Rating Agency rated the class A notes, A; class B notes, A-; class C notes, BBB; and class D notes, BB. Kroll Bond Rating Agency rated the class A notes, AA-; class B notes, A-; class C notes, BBB-; and class D notes, BB-.

In April 2022, Car-Mart announced it had priced $400 million in asset-backed notes as the company entered the securities market.

Shares of Car-Mart (NASDAQ: CRMT) closed Tuesday (Feb. 7) at $94, down $1.53 or 1.6%. In the past 52 weeks, the stock has ranged between $52.24 and $127.05.