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Chase Dealer Services - Setting the Pace Newsletter

Chase Auto Helps Ken Garff Group Embrace what’s Next with Unique High Yield Bond Financing

Since 2006, the Ken Garff Automotive Group (“Ken Garff”) has acquired 28 dealerships across the country in partnership with Leucadia National Corp. Building on its reputation as a trailblazer, Ken Garff is paving the way for future generations of this family-owned business.

In a move made possible by a first-of-its-kind public debt financing for a privately held company, Ken Garff is buying out Leucadia’s ownership of the joint venture. This is the first time in US automotive retailer history that a privately held company has 1) issued bonds and 2) bought out their publicly traded majority partner, according to Jeffrey Johns, National Sales Executive for Chase Auto. The net $425 million deal closed in 3rd quarter of 2018.

This groundbreaking move was made possible with a $375 million high yield bond offering and a $1.3 billion syndicated credit facility led by Chase Auto and the JPMorgan Investment Bank.

Deal built on the foundation of a strong relationship

“Our 20-year relationship with Ken Garff that has endured many economic cycles and has continued to grow over the years,” said Syd Winter, Business Development Director for Chase Auto. “And we’ve strengthened our position as a leading provider of banking services for Garff Enterprises for years to come.”

John Garff, President of Ken Garff Enterprises, LLC, recalls that the relationship between Ken Garff and Chase began with a Chase sales rep “…who over-serviced our very small account. He kept every commitment he made,” he said. “Twenty years later, other than adding a few zeros to our loan balances, I’m happy to report not much has changed!”

Delivering through teamwork

The deal also shows how clients benefit when multiple partners work together.    

“By combining the capabilities of the Investment Bank with those of Chase Auto, we were able to offer a seamless solution to our client -- providing both capital and banking services for the Garff family business,” said Johns.

The transactions required to make this deal happen transpired in a single day—the culmination of weeks of coordinated teamwork. “It was an emotional day seeing how everyone in the firm worked together and brought this deal to the finish line,” Winter said. “Our client was very pleased. It shows that when we harness the power of JPMorgan Chase.”

The bond offering “allowed Ken Garff to obtain unsecured financing in the public debt market with very favorable repayment terms,” said Johns. “At the same time it allowed for a syndicate of banks and captives led by JPMorgan Chase to finance the ongoing operations of their 48 dealerships with very cost effective financing.”

THE GARFF AUTOMOTIVE GROUP

Ken Garff, founder, opened his first dealership in 1932. Headquartered in Salt Lake City, the business now has more than 20 dealerships in Utah alone and more than 50 nationwide—ranking in the top ten on Automotive News’ list of the largest dealership groups based in the U.S. 

In 2006, Ken Garff and private equity group Leucadia National Corp., partnered to form Garcadia, a limited liability company created to expand the business by acquiring dealerships. The 28 dealerships that Garcadia has since acquired are in Texas, Michigan, Iowa and California. In addition to being part-owner of Garcadia, Ken Garff has managed the Garcadia business in conjunction with its Utah based dealerships, which are 100% owned by the Ken Garff family.

The Ken Garff logo is owned by Garff Enterprises, LLC. Ken Garff is not affiliated with JPMorgan Chase Bank, N.A. (“Chase”).

This is for informational purposes only and not intended for distribution or as business, tax or legal advice.