Long-Term Debt and Commercial Paper

9 Months Ended

Sep. 30, 2020

LONG-TERM DEBT AND COMMERCIAL PAPER

Long-term debt consists of the following:


Debt Description	Maturity Date	Interest Payable	September 30, 2020		December 31, 2019
5.5% Senior Notes	February 1, 2020	February 1 and August 1	$	—	$	350.0
3.35% Senior Notes	January 15, 2021	January 15 and July 15	300.0		300.0
3.5% Senior Notes	November 15, 2024	May 15 and November 15	450.0		450.0
4.5% Senior Notes	October 1, 2025	April 1 and October 1	450.0		450.0
3.8% Senior Notes	November 15, 2027	May 15 and November 15	300.0		300.0
4.75% Senior Notes	June 1, 2030	June 1 and December 1	500.0		—
Revolving credit facility	March 26, 2025	Monthly	—		—
Finance leases and other debt	Various dates through 2039	Monthly	105.3		93.9
			2,105.3		1,943.9
Less: unamortized debt discounts and debt issuance costs							(15.6)		(9.8)
Less: current maturities			(307.7)		(355.6)
Long-term debt, net of current maturities					$	1,782.0	$	1,578.5

Debt Refinancing Transaction

On March 26, 2020, we amended and restated our existing unsecured credit agreement to, among other things, (1) provide for lower commitment fees and loan margins as set forth in the amended and restated credit agreement, (2) extend the maturity date to March 26, 2025, and (3) provide for customary LIBOR replacement provisions.

Senior Unsecured Notes and Credit Agreement

On May 21, 2020, we issued $500.0 million aggregate principal amount of 4.75% Senior Notes due 2030, which were sold at 99.479% of the aggregate principal amount. In February 2020, we repaid the outstanding $350.0 million of 5.5% Senior Notes due 2020. Our 3.35% Senior Notes due 2021 will mature on January 15, 2021, and were, therefore, reclassified to current maturities during the first quarter of 2020.

The interest rates payable on our outstanding senior unsecured notes are subject to adjustment upon the occurrence of certain credit rating events as provided in the indentures for these senior unsecured notes.

Under our amended and restated credit agreement, we have a $1.8 billion revolving credit facility that matures on March 26, 2025. The credit agreement also contains an accordion feature that allows us, subject to credit availability and certain other conditions, to increase the amount of the revolving credit facility, together with any added term loans, by up to $500.0 million in the aggregate. As of September 30, 2020, we had no borrowings outstanding under our revolving credit facility. We have a $200.0 million letter of credit sublimit as part of our revolving credit facility. The amount available to be borrowed under the revolving credit facility is reduced on a dollar-for-dollar basis by the cumulative amount of any outstanding letters of credit, which was $39.7 million at September 30, 2020, leaving a borrowing capacity under the revolving credit facility of $1.8 billion at September 30, 2020.

Our revolving credit facility under the amended credit agreement provides for a commitment fee on undrawn amounts ranging from 0.125% to 0.20% and interest on borrowings at LIBOR or the base rate, in each case plus an applicable margin. The applicable margin ranges from 1.125% to 1.50% for LIBOR borrowings and 0.125% to 0.50% for base rate borrowings. The interest rate charged for our revolving credit facility is affected by our leverage ratio. For instance, an increase in our leverage ratio from greater than or equal to 2.0x but less than 3.25x to greater than or equal to 3.25x would result in a 12.5 basis point increase in the applicable margin.

Within the meaning of Regulation S-X, Rule 3-10, AutoNation, Inc. (the parent company) has no independent assets or operations. If the guarantees of our subsidiaries were to be issued under our existing registration statement, we expect that such guarantees would be full and unconditional and joint and several, and any subsidiaries other than the guarantor subsidiaries would be minor.

Other Long-Term Debt

At September 30, 2020, we had finance leases and other debt obligations of $105.3 million, which are due at various dates through 2039.

Commercial Paper

We have a commercial paper program pursuant to which we may issue short-term, unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $1.0 billion. The interest rate for the commercial paper notes varies based on duration and market conditions. The maturities of the commercial paper notes may vary, but may not exceed 397 days from the date of issuance. Proceeds from the issuance of commercial paper notes are used to repay borrowings under the revolving credit facility, to finance acquisitions and for working capital, capital expenditures, share repurchases, and/or other general corporate purposes. We plan to use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under the commercial paper program. A downgrade in our credit ratings could negatively impact our ability to issue, or the interest rates for, commercial paper notes.

At September 30, 2020, we had no commercial paper notes outstanding. At December 31, 2019, we had $170.0 million of commercial paper notes outstanding with a weighted-average annual interest rate of 2.13% and a weighted-average remaining term of 12 days.