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NEW YORK - Advance Auto Parts, Inc. (NYSE:AAP) announced Monday it has priced an offering of $1.95 billion in senior notes, split between two tranches with different maturity dates. The automotive parts retailer, currently valued at $3.4 billion, is making this move amid challenging market conditions. According to InvestingPro data, the company carries $4.1 billion in total debt and has faced profitability challenges in recent quarters.
The automotive aftermarket parts provider is offering $975 million in senior notes due 2030 with a 7.000% interest rate and $975 million in senior notes due 2033 with a 7.375% interest rate. Both note series will pay interest semi-annually and will be guaranteed by Advance’s wholly-owned domestic subsidiaries, according to a company press release.
The transaction is expected to close around August 4, 2025, subject to customary closing conditions.
Concurrently, Advance plans to enter a new $1 billion asset-based loan revolving credit facility to replace its existing credit facility. The new five-year facility will include an uncommitted accordion feature and be subject to a borrowing base.
The company intends to use part of the proceeds to redeem all outstanding 5.90% Senior Notes due March 2026, with the remainder allocated for general corporate purposes. A portion of the proceeds, along with cash on hand, is expected to be contributed as qualified cash to the initial borrowing base for the new credit facility.
The notes and related guarantees have not been registered under the Securities Act of 1933 and are being offered only to qualified institutional buyers under Rule 144A and to non-U.S. persons 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. With annual revenue of $8.9 billion, AAP trades at a relatively high EBITDA multiple, suggesting premium valuation. Discover more detailed financial metrics and exclusive insights with InvestingPro, including 7 additional key ProTips and comprehensive valuation analysis.
In other recent news, Advance Auto Parts announced its preliminary second quarter 2025 financial results, projecting net sales between $1.98 billion and $2.00 billion, with comparable store sales growth ranging from 0.0% to 0.1%. The company anticipates an adjusted operating income margin between 2.8% and 3.0% for the quarter. In a significant financial move, Advance Auto Parts has launched a $1.5 billion senior unsecured notes offering, which includes two tranches of notes due in 2030 and 2033. The company 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. This comes as Moody’s downgraded Advance Auto Parts’ corporate family rating to Ba3, citing increased debt levels and expected higher leverage. Meanwhile, Citi raised its price target for Advance Auto Parts to $60, and DA Davidson increased its target to $65, both maintaining a Neutral rating. These adjustments follow the company’s debt issuance and new ABL facility plans aimed at supporting its supply chain financing program.
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