Lithia Motors Inc., aspiring to eliminate all debt except floorplan lines and mortgages, has said it should raise $40 million in its stock offering expected to close next week.
Lithia, the No. 8 U.S. dealership group, priced its 4-million-share offering of common stock at $10 per share. The company said yesterday in a statement it expected the offering to close Oct. 15. Underwriters have a 30-day option to buy an additional 600,000 shares to cover any investor purchases beyond the initial offering.
Lithia, of Medford, Ore., has said it intends to apply proceeds of the sale toward debt reduction, working capital and possible dealership acquisitions.
The dealership group's stock closed up 3.4 percent today at $11.25.
The dealership group 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 sells 27 brands at 88 stores in 13 states and posted revenue of $2.5 billion last year. The dealership group sold 46,725 new retail units in 2008.