Lithia Motors, Inc. Enters Into Seventh Amendment to Fourth Amended and Restated Loan Agreement

Date: March 4, 2026

Reported Event Date: February 27, 2026

Key Highlights from the 8-K Filing

• Material Event: Lithia Motors, Inc. (“the Company”) signed a Seventh Amendment to its Fourth Amended and Restated Loan Agreement.
• Loan Facility: The amendment concerns a revolving line of credit totaling \$2.4 billion.
• Key Change: The Seventh Amendment notably removes the “Simple SOFR Adjustment” from the loan agreement’s interest calculation provisions.
• Parties Involved: The agreement is between Lithia Motors, its listed subsidiaries, a syndicate of lenders, and U.S. Bank National Association as agent.
• Exhibit Provided: The full text of the Seventh Amendment was filed as Exhibit 10.1 to the 8-K.

Details of the Amendment

On February 27, 2026, Lithia Motors entered into a significant amendment to its primary corporate credit facility. The Seventh Amendment targets the Company’s \$2.4 billion revolving credit line, which supports ongoing operational liquidity and strategic initiatives.

Major Change: Removal of Simple SOFR Adjustment

• The “Simple SOFR Adjustment”—a spread previously applied to the SOFR (Secured Overnight Financing Rate) component in calculating interest—has been removed.
• This means that future interest payments on the revolving credit line will no longer include this adjustment, potentially reducing interest expense for Lithia Motors subject to prevailing SOFR rates.
• This change follows broader market trends as financial institutions and borrowers adjust to benchmark rate reforms and the evolving landscape for loan interest calculations.

Financial and Regulatory Compliance

• The Company and its subsidiaries remain in compliance with financial covenants post-amendment, on a pro forma basis as required by the loan agreement.
• Standard “know your customer” (KYC), anti-money laundering (AML), and beneficial ownership compliance checks are included as conditions precedent for the effectiveness of the amendment.
• All fees and expenses invoiced in connection with the amendment are to be paid as of the effective date.

Other Noteworthy Provisions

• The loan agreement includes a comprehensive set of definitions, covenants, and event-of-default provisions. Notably, it sets forth elaborate financial reporting, collateral, and guarantee requirements.
• It also details change-of-control provisions, which, if triggered, could significantly impact Lithia’s financial structure and lender relations.
• There is a robust mechanism for handling amendments, waivers, and assignments of lender commitments.

Potential Shareholder Impact and Price Sensitivity

• Interest Rate Savings: The removal of the Simple SOFR Adjustment may reduce Lithia Motors’ borrowing costs, thereby positively impacting net income and cash flows, especially if SOFR rates remain stable or decline.
• Liquidity Strengthening: Maintaining access to a \$2.4 billion revolving credit facility further strengthens Lithia’s liquidity position, supporting its growth strategy and providing flexibility for acquisitions, working capital, and other corporate needs.
• Market Perception: Amendments that improve terms for the borrower (such as removing an interest rate add-on) are generally viewed favorably by investors as they enhance financial flexibility and reduce costs.
• Risk Factors: Shareholders should note that the full agreement includes extensive covenants and triggers that, if breached, could lead to adverse outcomes, including acceleration of debt. Vigilance regarding compliance is necessary.

Leadership and Corporate Governance

The 8-K was signed by Tina Miller, Chief Financial Officer, Senior Vice President, and Principal Accounting Officer of Lithia Motors, Inc., affirming the Company’s commitment to regulatory transparency and timely disclosure.

Conclusion

Summary: The Seventh Amendment to Lithia Motors’ \$2.4 billion revolving credit agreement, specifically the removal of the Simple SOFR Adjustment, is a positive financial development that may enhance future profitability and liquidity. Investors should view this as evidence of proactive financial management and a continued strong relationship with the Company’s lenders.

This development is potentially price sensitive and could positively affect Lithia Motors’ share value.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should review the official SEC filings and consult their own financial advisors before making any investment decisions. The author has made reasonable efforts to present accurate information but does not guarantee its completeness or accuracy.

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