Sonic Automotive added Bank of America to its credit facility syndicate when it redid its deal this month in order to break into the traditional bank lending market. The automotive retailer never had a bank lender on its loans before, explained Theodore Wright, cfo. He stated that "captive" auto lenders, such as those in the present syndicate-- Ford Motor Credit, DaimlerChrysler Services North America and Toyota Motor Credit-- had historically provided Sonic's long-term financing. "Over the long term, we are going to be interested in obtaining [loan] financing," he said of future bank lending transactions. He added that B of A was selected to join the credit because of the bank's long relationship with the company through past bond deals and other transactions.
The B of A addition came with an amended credit agreement. Sonic reduced the maximum capacity on the secured revolver from $600 million to $500 million. Wright noted that the reduction lowered the company's payment on the unused commitment. The maturity date was also extended from October 2004 to October 2006. He said the extension allows the company more time to breathe without worrying about refinancing its credit. The amended deal also priced up by five basis points to 255 basis points over LIBOR, Wright added, noting that the covenants remained unchanged. The line is in place for acquisition financing and working capital and is subject to borrowing base provisions. Ford Motor Credit leads the line and has a long relationship with Sonic, Wright noted. There was $146 million available under Charlotte, N.C.-based Sonic's facility as of last December.