Penske's New Credit Facility in U.K

Penske Automotive Group, Inc. (PAG - Analyst Report) recently announced that its U.K subsidiaries have entered into a new credit facility worth £110 million ($172.2 million) with the Royal Bank of Scotland Group Plc (RBS - Snapshot Report) and BMW Financial Services. The £110 million credit facility includes a £100 million ($156.4 million) revolver and a £10 million ($15.8 million) demand overdraft line of credit.

This new credit facility will replace the company’s existing £102 million ($160.0 million) credit facility, scheduled to mature in November 2013. The company believes that the new credit facility will be utilized to fund the company’s investment plans, pursue accretive acquisitions and for other general corporate purposes.

In the last reported quarter, Penske earned an adjusted income of $45.7 million or 50 cents per share from continuing operations, significantly ahead of the year-ago level of $34.8 million or 38 cents. Revenues climbed 10.5% year over year to $3.00 billion, mainly attributable to a 6.2% rise in total retail sales to 72,204 units as well as strong performance of the parts and service business. Same-store retail revenue climbed 6.4% to $2.67 billion.

During the quarter, the company repurchased 1,831,559 shares at an average price of $17.39. Currently, the company has $106.8 million remaining for future repurchases. Penske’s board of directors also hiked its quarterly dividend by 12.5% to 9 cents per share, to be paid on December 1, 2011 to the shareholders of record as of November 14, 2011.

Penske had cash and cash equivalents of $7.7 million as of September 30, 2011, down substantially from $17.8 million as of December 31, 2010. Moreover, long-term debt amounted to $841.9 million at the end of the third quarter of 2011 compared with $769.3 million at the end of the fourth quarter of 2010.

Based in Bloomfield Hills, Michigan, Penske Automotive, a Zacks #2 Rank (Buy rating) stock, was established in 1990 and is the second-leading automotive retailer in the U.S.

Following the acquisition of Fred Baker Porsche and Audi franchises in the Cleveland metropolitan area, Penske Automotive operates 172 franchises in 17 states and Puerto Rico and 154 franchises overseas, primarily in the U.K as well as Germany and Mexico.

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