Sonic Automotive Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
$SAH
Retail-Auto Dealers and Gas Stations
Consumer Discretionary
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 13, 2024
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(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code: (704) 566-2400
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Item 1.01. Entry into a Material Definitive Agreement
On March 13, 2024 (the “Effective Date”), Sonic Automotive, Inc. (the “Company”) and certain of its subsidiaries entered into the Sixth Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, revolving swing line lender, new vehicle swing line lender, used vehicle swing line lender, letter of credit issuer and a lender, BMW Financial Services NA, LLC, JPMorgan Chase Bank, N.A., Mercedes-Benz Financial Services USA LLC, Toyota Motor Credit Corporation, PNC Bank, National Association, VW Credit, Inc., American Honda Finance Corporation, U.S. Bank National Association, Wells Fargo Bank, National Association, MassMutual Asset Finance LLC, TD Bank, N.A., World Omni Financial Corp., and First National Bank of Pennsylvania as lenders. The Credit Agreement amended and restated the Company’s existing Fifth Amended, Restated and Consolidated Credit Agreement, dated as of April 14, 2021, among the Company, the subsidiaries of the Company named therein, the lenders party thereto, and Bank of America, N.A., as administrative agent, revolving swing line lender, new vehicle swing line lender, used vehicle swing line lender, letter of credit issuer and a lender (as amended prior to the Effective Date, the “Existing Credit Agreement”). The Existing Credit Agreement is comprised of a revolving credit facility (as amended, the “Revolving Credit Facility”), a new vehicle revolving floor plan facility (as amended, the “New Vehicle Floor Plan Facility”) and a used vehicle revolving floor plan facility (as amended, the “Used Vehicle Floor Plan Facility and, together with the New Vehicle Floor Plan Facility, the “Floor Plan Facilities”).
The Credit Agreement amended the Existing Credit Agreement to, among other things, decrease the aggregate commitments under the Floor Plan Facilities by $550.00 million, from $2.95 billion to $2.4 billion, which commitments may be increased at the Company’s option by up to $450.0 million. The commitments under the New Vehicle Floor Plan Facility were increased by $320.00 million from $1.03 billion to $1.35 billion and the commitments under the Used Vehicle Floor Plan Facility commitments were decreased by $870.00 million from $1.57 billion to $700.00 million.
In addition to the various other changes contained therein, the Credit Agreement (i) extended the maturity date to March 13, 2029, five (5) years from the closing of the Credit Agreement, with a permitted one-year extension option thereafter; (ii) increased the basket for quarterly dividends from $0.12 to $0.18 per share of qualified capital stock; (iii) provided additional flexibility for the Company to make asset sales and repurchases of its qualified capital stock; and (iv) removed the covenant requiring the Company to maintain a specified consolidated liquidity ratio.
The foregoing summary of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference.
In connection with the entering into of the Credit Agreement, the Company, its subsidiaries or its affiliates, as applicable, entered into various collateral documents with respect to the Revolving Credit Facility. These documents include an amended and restated security agreement, an amended and restated escrow and security agreement, an amended and restated securities pledge agreement and amended and restated guaranty agreements (collectively with the other agreements delivered in connection with the Credit Agreement, the “Collateral Documents”) with Bank of America, N.A., as administrative agent. Under the Collateral Documents, outstanding obligations under the Revolving Credit Facility are secured by a pledge of substantially all of the Company’s personal property and the personal property of substantially all of the Company’s domestic subsidiaries. The Collateral Documents also provide for the pledge of the franchise agreements and stock or equity interests of the Company’s dealership franchise subsidiaries, except for those dealership franchise subsidiaries where the applicable manufacturer prohibits such a pledge, in which cases the stock or equity interests of the dealership franchise subsidiary is subject to an escrow arrangement with the administrative agent. Substantially all of the Company’s domestic subsidiaries also guarantee the Company’s obligations under the Revolving Credit Facility under the terms of an amended and restated subsidiary guaranty agreement with Bank of America, N.A., as administrative agent, entered into in connection with the Credit Agreement.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 is incorporated by reference into this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |||||||
| 10.1 | ||||||||
| 10.2 | ||||||||
| 10.3 | ||||||||
| 10.4 | ||||||||
| 10.5 | ||||||||
| 10.6 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SONIC AUTOMOTIVE, INC. | ||||||||
| March 19, 2024 | By: | /s/ STEPHEN K. COSS | ||||||
| Stephen K. Coss | ||||||||
| Senior Vice President and General Counsel | ||||||||