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Sonic owns plenty of MINI and BMW shops; wonder how this will work out for us and the degree of service that we can expect from them?
It's already evident to me that BMW's cut-back on the 3-year service remuneration dollars has impacted dealerships negatively...
Let's hope that they don't begin to cut corners (even more) to make ends meet:
Sonic Automotive: Bankruptcy is an option
By Jefferson George - jgeorge@charlotteobserver.com
Tuesday, Mar. 31, 2009
Charlotte-based Sonic Automotive – a Fortune 500 company and one of the nation's largest auto dealers – today reported a staggering loss for 2008 and said it may have to file for bankruptcy protection.
The company said it has struggled because of outstanding debts accumulated during a recession that has severely curbed car sales.
“If we do not restructure or obtain additional financing to satisfy our substantial debt obligations, we may not be able to continue as a going concern or we may be unable to avoid filing for bankruptcy protection,” stated Sonic's annual report, filed this afternoon with federal regulators.
The company, which is led by Bruton Smith and has more than 150 locations across the U.S., had about $1.9 billion in outstanding debt as of Dec. 31. Roughly $1.5 billion of debt is scheduled to mature this year and next.
“Our significant indebtedness and near-term debt maturities could materially adversely affect our financial health, limit our ability to finance future acquisitions and capital expenditures and prevent us from fulfilling our financial obligations,” Sonic said in its report.
Sonic posted a nearly $686 million loss last year, a huge swing from a $95.5 million profit in 2007. The company's 2008 revenues were about $6 billion, down almost 11 percent from the previous year.
Sonic filed its report after the stock market closed today. Shares in the company closed at $1.60, down almost 12 percent from Monday and about 90 percent from a year ago.
Sonic has scheduled a conference call on the financial results for 11 a.m. Wednesday.
Sonic dodges bankruptcy through new debt accord
Donna Harris
Automotive News
May 5, 2009 - 11:35 am ET
Sonic Automotive Inc. avoided bankruptcy as bondholders allowed the nation's third-largest dealership group to postpone a $90 million debt payment until 2012.
On April 1, Sonic warned of a possible bankruptcy if it wasn't able to restructure debt that would have matured this week.
In exchange for the delay, Sonic agreed to pay a higher interest rate -- 6 percent instead of 5.25 percent.
According to a report by analyst Rich Kwas of Wachovia Capital Markets, $86 million of the $90 million will be refinanced at 6 percent interest. For the remaining $4 million, the company will issue 857,616 common shares at $4.58.
Sonic President Scott Smith said he was pleased with the terms.
"Each percentage point represents about $1 million a year, so we are paying about $750,000 more per year in interest," Smith said. "It could have been worse."
In publicly held Sonic's 10-K annual report, its auditors questioned whether the company could continue to operate as a going concern. This "going concern" notice put Sonic in violation of some of its debt covenants.
Now that Sonic has rescheduled its debt, Smith said, the company is in compliance with its lending agreements. The amendment removes the going-concern qualification for 2008, Kwas wrote.
"The new agreements should alleviate investor concerns regarding near-term liquidity," he wrote. "As such, the shares should react favorably."
