Liquidity crisis or expansion plans?
Penske Automotive Group, Inc. has filed a registration statement with the Securities and Exchange Commission for a proposed secondary offering of up to 5.75 million shares of its common stock.
In a press release, the company said PAG’s principle shareholder and founder, Roger Penske was not selling any PAG stock that he owns personally.
The stock is coming from the holdings of the privately held Penske Corp., the holding company for Penske’s racing teams and Penske Truck Leasing. The proceeds from the sales will be used to provide the holding company with additional, “working capital,” the spokesman said.
Penske Corp. also own 41% of the stock in PAG, representative Tony Pordon said. The sale is expected to raise between $85 million and $95 million.
Upon completion of the proposed offering, however, Penske is expected to continue to own 35% of PAG’s outstanding common stock.
“Pursuant to a voting agreement between Penske Corporation and its second largest stockholder, Mitsui, Penske Corporation and Mr. Penske are expected to have majority voting control 52% of PAG’s outstanding common stock upon completion of the offering,” the company said.
However, the press release indicated, “that PAG will not sell any shares in the offering or receive any proceeds from the offering, suggesting that PAG has talked some of the company’s creditors into a debt for equity swap.
PAG has faces ongoing challenges. The Smart, for which PAG is the sold distributor, suffered a sharp sales decline and Jill Lajdziak, formerly the general manager at GM’s Saturn unit, took as smart’s top executive.
Penske himself, however, said recently he sensed there are opportunities in automotive retailing and recently purchased two dealerships in California.