Car-Mart sells $300 million in asset-backed notes
by October 11, 2024 9:33 am 180 views
Rogers-based America’s Car-Mart Inc. has completed a $300 million term securitization transaction, the company announced Friday (Oct. 11). The company previously completed a $250 million securitization transaction in January.
According to a Friday filing with the U.S. Securities and Exchange Commission, the net proceeds from the offering were $297.9 million. The money will be used to pay debt and make initial deposits into collection and reserve accounts for the benefit of noteholders. The notes are backed by $507.2 million in accounts receivables. ACM Auto Trust 2024-2, an indirect subsidiary of Car-Mart, issued the notes.
The notes were initially sold to BMO Capital Markets Corp., Atlas SP Securities, a division of Apollo Global Securities LLC, and MUFG Securities Americas Inc., and then resold to “qualified institutional buyers,” the filing shows.
“We are pleased with the successful completion of our second term securitization of 2024, with benchmark rate and spread improvements resulting in a (1.98 percentage point) improvement in the weighted average coupon compared to our January 2024 transaction,” said Vickie Judy, chief financial officer for Car-Mart. The overall weighted average coupon was 7.44% for the new transaction.
Last month, Car-Mart sold 1.7 million shares at $43 per share to raise $73 million. According to the company, the proceeds repaid a portion of the balance of its revolving credit facilities, and the remainder would be used for “general corporate purposes.” Jefferies was the sole book-running manager for the offering.
In a recent report, equity analysts John Hecht, Derek Sommers, Matthew Hurwit, and equity associates Alexander Villalobos and Ibrahim Kargbo, all of Jefferies, said the equity raise improved “liquidity, reduces leverage and bolsters the balance sheet.”
“We view the capital raise as an opportunistic exercise to bolster the (balance sheet) and to strengthen (Car-Mart’s) position into the next expansion cycle,” the analysts said. “(Fiscal year 2021 to 2023) vintage loans continue to pay down, and as the overall loan-vintage mix shifts, we see an opportunity for credit to stabilizing/improve.”
Shares of Car-Mart (NASDAQ: CRMT) were trading Friday at $42.50, up $1.48 or 3.61%. In the past 52 weeks, the stock has ranged between $39.60 and $85.68.