Sonic Automotive: Bankruptcy is an option
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.
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