Sonic Automotive $150 million 10-year convertibles talked to yield 3.75%-4.25%, up 20%-25%

By Rebecca Melvin

Princeton, N.J., Nov. 17 - Sonic Automotive Inc. said it plans to offer $150 million 10-year convertible senior subordinated notes, which were expected to price Thursday after the close, according to a syndicate source.

Price talk for the registered deal was for a yield of 3.75% to 4.25% and an initial conversion premium of 20% to 25%.

Joint bookrunners for the offering are Banc of America Securities LLC, J.P. Morgan Securities Inc. and Merrill Lynch & Co.

The notes are non-callable for five years with a put in year five.

There is an over-allotment of up to an additional $10 million.

Net proceeds were expected to repay a portion of its revolving credit facility, which may be re-borrowed, and for general corporate purposes, including acquisitions.

Sonic also intends to use a portion of net proceeds to pay for a convertible note hedge and warrant transaction with affiliates of certain of the underwriters in connection with the offering.

Sonic Automotive, based Charlotte, N.C., is a large automotive retailer, operating 174 franchises and 38 collision repair centers in the United States.

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