Advance Auto Parts launches $1.5 billion notes offering

Published 24/07/2025, 18:08
Advance Auto Parts launches $1.5 billion notes offering

RALEIGH, N.C. - Advance Auto Parts, Inc. (NYSE:AAP) announced Thursday it has launched a $1.5 billion senior unsecured notes offering in a private transaction. The offering consists of two tranches of notes due 2030 and 2033, which will be guaranteed by the company’s wholly-owned domestic subsidiaries. The automotive parts retailer, currently valued at $3.7 billion, has seen its stock surge nearly 39% over the past six months, according to InvestingPro data.

The automotive aftermarket parts provider also plans to establish a new five-year asset-based loan revolving credit facility of up to $1 billion to replace its existing credit facility. The new facility will include an uncommitted accordion feature, subject to a borrowing base.

Advance intends to use part of the proceeds from the notes offering to redeem all of its outstanding 5.90% Senior Notes due March 9, 2026. The company will also contribute a portion of the proceeds, along with cash on hand, as qualified cash to the initial borrowing base for the new credit facility in an amount not exceeding $2.5 billion.

The notes and related guarantees have not been registered under the Securities Act of 1933 and will be offered only to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S.

As of April 19, 2025, Advance Auto Parts operated 4,285 stores primarily in the United States, with additional locations in Canada, Puerto Rico, and the U.S. Virgin Islands. The company also served 881 independently owned Carquest branded stores across these locations and in Mexico and various Caribbean islands.

The information in this article is based on a press release statement from the company.

In other recent news, Advance Auto Parts has been in the spotlight following several key developments. The company pre-announced its preliminary second-quarter 2025 results alongside a $1.5 billion debt offering and a new ABL revolver, aimed at bolstering its supply chain finance program. This move led DA Davidson to raise its price target for the company from $47 to $65, maintaining a Neutral rating. Meanwhile, Moody’s downgraded Advance Auto Parts’ corporate family rating to Ba3 from Ba1, citing increased debt levels from the planned issuance of new notes. Moody’s expects the company’s debt-to-EBITDA ratio to reach approximately 6.1x by the end of fiscal 2025.

S&P Global Ratings also downgraded the company to ’BB’ from ’BB+’, expressing concerns over elevated leverage and the execution risks of its turnaround plan. On a more positive note, TD Cowen raised its price target to $62, driven by expectations for a slightly stronger EBIT margin in the third quarter, although it maintained a Hold rating. Mizuho also increased its price target to $44, citing better-than-expected first-quarter results as the reason for revising its earnings estimates upward. These developments reflect a mix of optimism and caution among analysts regarding Advance Auto Parts’ financial outlook and strategic initiatives.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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