The Charlotte Business Journal reports that Sonic Automotive's days may be numbered. On late Tuesday, one of the largest auto retailers in the country with 169 franchises and 34 collision-repair centers, in addition to announcing a whopping Q4 $17.10 loss per share, the company stated "it risks defaulting on its debt this year and may not be able to avoid a bankruptcy filing to reorganize its operations." The company, facing $1.5 billion in debt maturities between May 2009 and November 2010, has wisely followed in Idearc's footsteps and has retained Bill and Thane's Moelis Adventure "as financial adviser to assist it in evaluating alternatives to enhance liquidity and address its debt maturities."
The company already would be in default on at least a part of its debt, but it obtained a last-minute agreement Tuesday with Bank of America Corp. (NYSE:BAC).
Sonic has until May 4 to work out a more thorough agreement with the Charlotte-based bank. On May 9, it must pay $105.3 million for the first round of debt that comes due. But the current agreement with BofA would prohibit it from borrowing that money to refinance the debt.
The company is attempting to negotiate amendments to those agreements that would clear the way for a restructuring. But in its regulatory filing Tuesday, Sonic says, “We can give no assurances that we will be successful in our restructuring or refinancing activities.”
Seeing how the government will soon give $20k to every person who buys a car (financed with $30k in new Treasuries), it may just benefit the company's lenders to cut them a little slack.