Lithia Motors Inc., aiming to reduce all debt except floorplan lines and mortgages, is offering 4 million shares of its common stock and plans to use proceeds to pay down debt and operate its business.
Lithia, the No. 8 U.S. dealership group, said Monday in a regulatory filing it expects it will first pay down outstanding amounts under its revolving credit facility and at least one of its floorplan credit lines. Then, it will use remaining proceeds from the stock offering for working capital or potential acquisitions, Lithia said.
Lithia’s stock closed today at $12.67, down from its $13.78 close yesterday and $13.15 Friday.
Lithia posted profits in both the first and second quarters this year, ending a five-quarter losing streak that culminated with a $252.6 million full-year net loss in 2008, according to Bloomberg data. Last year, the company embarked on a restructuring program, slashing its debt and divesting unprofitable dealerships.
In July, CEO Sid DeBoer said the company was "well on the way" to achieving its goal of eliminating all debt except floorplan credit lines and mortgages.
Lithia said in the regulatory filing it would allow underwriters to purchase up to 600,000 additional shares to cover any additional investor purchases beyond the initial offering.
Donna Harris contributed to this report