Sonic Automotive $130 million convertibles notes talked at 5-5½%, up 30-35%

New York, May 1 - Sonic Automotive, Inc. was set to sell $130 million of convertible senior subordinated notes due 2009 after the close Wednesday.

The offering is talked at a yield of 5% to 5½% and an initial conversion premium of 30% to 35%.

Merrill Lynch & Co. is lead manager; the syndicate also includes Banc of America Securities LLC and Wachovia Securities.

The Charlotte, N.C. auto retailer will use proceeds to repay borrowing on its revolving credit facility. Sonic added that the amount paid down may be reborrowed and used for acquisitions or general corporate purposes.

The deal will be drawn off the company's shelf filing.

It will be non-callable for three years and has a contingent conversion feature with a 110% threshold.

There is a $19.5 million greenshoe.

Moody's Investors Service rated the deal B3 while Standard & Poor's assigned a B+ rating. Moody's said it rated the notes lower than Sonic's existing senior subordinated notes, which carry a B2 rating, because the convertibles will not be guaranteed by the company's operating subsidiaries.

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