Sonic Automotive to price $125 million 20-year convertibles to yield 5.5%-6%, up 22.5%-27.5%

By Rebecca Melvin

New York, Sept. 14 - Sonic Automotive Inc. planned to price about $125 million of 20-year convertible senior notes after the market close on Thursday, which were talked to yield 5.5% to 6% with an initial conversion premium of 22.5% to 27.5%, according to a syndicate source.

There is an over-allotment option for an additional $18.75 million of notes.

Sonic Automotive also plans to price 9 million shares of stock with a 1.35 million share greenshoe.

The registered deals are being sold via J.P. Morgan Securities Inc. and Bank of America Merrill Lynch. Wells Fargo Securities, Moelis & Co. and Stephens Inc. are acting as co-managers for the offerings.

The bonds are non-callable for five years, with puts in years five, 10 and 15. There is contingent conversion at a price hurdle of 130%.

Proceeds will be used to repay Sonic's 4.25% convertible senior subordinated notes due 2015 of which there is about $160 million outstanding and which holders can put in November 2010 and to repay its 6% convertible senior subordinated notes due 2012.

If Sonic Automotive is unable to repay these notes, it will use proceeds from the offerings to repay outstanding amounts under its credit facility.

Charlotte, N.C.-based Sonic is the third largest automotive retailer in the United States.

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