Sonic Automotive Inc.
) has announced the pricing of $200 million senior subordinated
notes at 99.110% of the principal amount. The 7.00% senior
subordinated notes are due in 2022 with a yield to maturity of
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The company will be closing the private offering on July 2, 2012.
The proceeds from the offering will be used in repurchasing the
outstanding 5.0% Convertible Senior Notes, which are due in 2029.
The repurchase would be in exchange of Class A common stock of the
company along with cash. It would be used for the related payment
of fees and expenses.
Sonic Automotive plans to buy back all the outstanding 5.0%
Convertible Senior Notes with the proceeds. The remaining amount
would be used for general corporate purposes, including repurchase
of Class A common stocks.
Sonic Automotive, in the first quarter of 2012, witnessed a 24%
surge in profit to $19.5 million from $15.7 million a year ago.
Earnings per share swelled 22% to 33 cents from 27 cents in the
first quarter of 2011. However, the results missed the Zacks
Consensus Estimate by a penny.
Revenues went up 9.8% year over year to $1.6 billion. The hike was
driven by a boost in revenues from new and used vehicles. The
company recorded a 12.1% and 9% jump in revenues from new vehicle
retail and used vehicle, respectively.
Charlotte, North Carolina-based Sonic Automotive is a Fortune 500
company. It is one of the largest automotive retailers. The company
operates with 100 dealerships spread across 15 states and in 26
major metropolitan markets. It represents about 30 different
automotive brands with the majority of the dealerships being luxury
and import brands. It competes with
Currently, Sonic Automotive retains a Zacks #3 Rank, which
translates into a short-term (1 to 3 months) Hold rating. We have a
long-term (more than 6 months) Neutral recommendation on the