Sonic Automotive Inc., four months after postponing debt payments to avert bankruptcy, is beginning a public offering of common stock and convertible senior debt notes, the dealership group said today in a regulatory filing.
Sonic plans to refinance its existing debt by offering about 9 million shares of common stock and $125 million in convertible senior debt due in 2029, it said in a filing with the U.S. Securities and Exchange Commission.
The dealership group said it plans to use proceeds from the sale to repay at least some of the outstanding amount of existing 4.25 percent debt notes due in 2015, which could be called due in November 2010, and its 6 percent debt notes due in 2012.
Sonic had $90 million of debt payments due in May, but lenders agreed to postpone that Sonic obligation until 2012. In exchange, the dealership group agreed to pay a higher interest rate -- 6 percent instead of 5.25 percent -- and raise $4 million through stock offerings.
As part of the stock and securities offering, Sonic is allowing purchase of an additional 1.4 million shares of common stock and $18.8 million in convertible senior notes to cover any additional investor purchases beyond the initial offering. The dealership group and its underwriters will determine the offering price, interest rate and conversion price of all the new senior notes.
In early-morning trading, Sonic stock had fallen 9.1 percent to $10.14.
On April 1, Sonic warned of possible bankruptcy if it wasn't able to restructure its debt. A few days after postponing its debt payments, Sonic ended two quarters of losses by posting a $1.7 million first-quarter profit.