Penske Automotive Group, Inc. announced that on January 1, 2023, company entered into the Ninth Amendment (the ‘Amendment') to U.S. credit agreement with Mercedes-Benz Financial Services USA LLC and Toyota Motor Credit Corporation (as amended, the ‘U.S. Credit Agreement') to decrease non-use fee payable on available but unused credit commitments (other than commitments to issue letters of credit) from 0.30% per annum to 0.20% per annum. The U.S. Credit Agreement provides for up to $800.0 million in revolving loans for working capital, acquisitions, capital expenditures, investments, and other general corporate purposes, and provides up to an additional $50.0 million of letters of credit. The U.S. Credit Agreement provides for a maximum of $150.0 million of borrowings for foreign acquisitions and expires on September 30, 2025.

The interest rate on revolving loans is LIBOR plus 1.50%, subject to an incremental 1.50% for uncollateralized borrowings in excess of a defined borrowing base. The U.S. Credit Agreement is fully and unconditionally guaranteed on a joint and several basis by substantially all of U.S. subsidiaries and contains a number of significant operating covenants that, among other things, restrict ability to dispose of assets, incur additional indebtedness, repay certain other indebtedness, pay dividends, create liens on assets, make investments or acquisitions, and engage in mergers or consolidations. Company are also required to comply with specified financial and other tests and ratios, each as defined in the U.S. Credit Agreement, including a ratio of current assets to current liabilities, a fixed charge coverage ratio, a ratio of debt to stockholders' equity, and a ratio of debt to earnings before interest, taxes, depreciation, and amortization (‘EBITDA').

A breach of these requirements would give rise to certain remedies under the U.S. Credit Agreement, the most severe of which is the termination of the agreement and acceleration of the amounts owed. The U.S. Credit Agreement also contains typical events of default, including change of control, non-payment of obligations, and cross-defaults to other material indebtedness. Substantially all of U.S. assets are subject to security interests granted to the lenders under the U.S. Credit Agreement.

Company purchase motor vehicles from affiliates of Mercedes-Benz Financial Services USA LLC and Toyota Motor Credit Corporation for sale at certain of dealerships. The lenders also provide and certain of dealerships with mortgage, ‘floor-plan', and consumer financing.