LKQ Corporation Announces Early Redemption of €750 Million 3.625% Senior Notes Due 2026

Rhea-AI Summary

LKQ Corporation announced that its subsidiary, LKQ European Holdings, has issued a notice for the early redemption of €750 million in Senior Notes due 2026. The redemption, set for April 1, 2021, will occur at a price of 101.813% plus accrued interest. This strategic move aims to utilize the company's strong liquidity to reduce its overall debt costs, as noted by CFO Varun Laroyia. The company will finance this through lower cost borrowings and cash reserves. The remaining €250 million senior notes due in 2028 will stay outstanding.

Positive

• Strategic early redemption of €750 million Senior Notes to lower debt costs.
• Utilizes strong liquidity position to generate interest expense savings.
• CFO emphasizes significant sustainable free cash flow generation since 2018.

Negative

• None.

CHICAGO, March 08, 2021 (GLOBE NEWSWIRE) -- LKQ Corporation (Nasdaq: LKQ) announced today that LKQ European Holdings B.V., a wholly-owned subsidiary of the Company, (“LKQ European Holdings”) delivered a notice of early redemption to the holders of LKQ European Holding’s €750 million 3.625% Senior Notes due 2026 (the “Notes”). The Notes and the redemption are governed by the Indenture, dated as of April 9, 2018 (the "Indenture"), among the Company, LKQ European Holdings, certain of the Company’s subsidiaries, the trustee, and the paying agent, transfer agent and registrar. The redemption date is scheduled for April 1, 2021 (the "Redemption Date"), subject to the Company having sufficient financing available on the Redemption Date to pay the redemption price. In accordance with the terms and conditions of the Indenture, the Notes will be redeemed at a redemption price equal to 101.813% of the principal amount of the Notes plus accrued and unpaid interest thereon to, but not including, the Redemption Date. LKQ European Holding’s €250 million senior notes due 2028, also governed by the Indenture, will remain outstanding.

Varun Laroyia, Executive Vice President and Chief Financial Officer of LKQ, noted, “With the tremendous progress made by LKQ to generate significant sustainable free cash flow since 2018, we plan to utilize our strong liquidity position to redeem our €750 million senior notes early with proceeds from lower cost revolver borrowings and cash on hand. The transaction will lower our weighted average cost of debt and provide meaningful interest expense savings.”

Payment of the redemption price for the Notes will be made to the paying agent pursuant to the Indenture. BNP Paribus Trust Corporation UK Limited is the trustee, and BNP Paribus Securities Services, Luxembourg Branch, is the paying agent, for the Notes.

This press release shall not constitute a notice of redemption nor does it constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful.

About LKQ Corporation

LKQ Corporation (www.lkqcorp.com) is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. LKQ has operations in North America, Europe and Taiwan. LKQ offers its customers a broad range of OE recycled and aftermarket parts, replacement systems, components, equipment, and services to repair and accessorize automobiles, trucks, and recreational and performance vehicles.

Forward Looking Statements

Statements and information in this press release that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are made pursuant to the “safe harbor” provisions of such Act.

Forward-looking statements include, but are not limited to, statements regarding our outlook, guidance, expectations, beliefs, hopes, intentions and strategies. These statements are subject to a number of risks, uncertainties, assumptions and other factors including those identified below.  All forward-looking statements are based on information available to us at the time the statements are made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should not place undue reliance on our forward-looking statements. Actual events or results may differ materially from those expressed or implied in the forward-looking statements. The risks, uncertainties, assumptions and other factors that could cause actual events or results to differ from the events or results predicted or implied by our forward-looking statements include, among others, major events affecting the bond markets, changes in interest rates, changes in our cash position or cash requirements for other purposes, general market conditions, and other factors discussed in our filings with the SEC, including those disclosed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in our subsequent Quarterly Reports on Form 10-Q. These reports are available on our investor relations website at lkqcorp.com and on the SEC website at sec.gov.

Contact:
Joseph P. Boutross
Vice President, Investor Relations
LKQ Corporation
(312) 621-2793
jpboutross@lkqcorp.com

FAQ

What is LKQ Corporation's recent announcement regarding its Senior Notes?

LKQ Corporation announced the early redemption of €750 million in Senior Notes due 2026, scheduled for April 1, 2021.

How will LKQ finance the redemption of its Senior Notes?

LKQ plans to finance the redemption using lower cost revolver borrowings and cash on hand.

What is the redemption price for LKQ's Senior Notes?

The redemption price is set at 101.813% of the principal amount plus accrued unpaid interest.

What are the implications of LKQ's early redemption of Senior Notes for investors?

The early redemption will lower LKQ's weighted average cost of debt, potentially leading to meaningful interest expense savings.

What remaining Senior Notes does LKQ have after this redemption?

After the redemption, LKQ will have €250 million in Senior Notes due 2028 still outstanding.