AutoTrader.com Deals $400M Dividend to Providence, KPCB, Other Shareholders

Who’s next in the dividend parade? This time, it’s AutoTrader.com.

The online automotive advertising company is currently in the market for $400 million in add-on credit facilities, according to Thomson Reuters Loan Pricing Corp. The deal includes a $200 million add-on revolver and a $200 million add-on term loan, LPC said.

Atlanta-based AutoTrader.com plans to use the proceeds to pay a dividend of $400 million to shareholders, according to Standard & Poor’s Rating Services.  Shareholders include Cox Enterprises, Providence Equity Partners and Kleiner Perkins.

AutoTrader.com, which was formerly known as AutoConnect.com, was established in 1997. Kleiner Perkins invested in the company in 1999. In 2008, Cox Enterprises reportedly tried to sell AutoTrader.com but couldn’t. Instead, in May 2010, Cox sold 25% of AutoTrader.com to Providence Equity. Cox remained majority owner. AutoTrader.com acquired Kelly Blue Book in October of that year. The deal was valued at $950 million, LPC reported.

About 65% of AutoTrader.com’s revenue comes from auto dealers, which provide relatively stable monthly subscriptions, S&P says. Kelly Blue Book accounts for 14% of AutoTrader.com’s revenue, S&P says. AutoTrader.com’s EBITDA margin will likely remain at 29%, S&P says, but that could expand slightly because of the company’s operating leverage.

AutoTrader.com has “a diverse revenue stream, with no client accounting for more than 2% of revenues, and a strong EBITDA margin that we expect will remain steady, if not expand,” the ratings agency says.

Officials for AutoTrader.com couldn’t be reached for comment.

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