Sonic Automotive holders tender near all 5% convertibles for exchange

By Susanna Moon

Chicago, July 30 - Sonic Automotive, Inc. said holders tendered $134,900,000, or 99.9963%, of its $134,905,000 of outstanding 5% convertible senior notes due 2029 in the exchange offer that expired at midnight ET on July 27.

In the offer, the company will pay about $137.1 million in cash, including accrued interest, and issue 4,074,905 class A shares to purchase the tendered notes, according to a press release.

After settlement on Aug. 1, about $5,000 principal amount of the notes will remain outstanding.

As previously noted, pricing was set on July 27 at $1,503.11 for each $1,000 principal amount of convertibles, which was calculated using (a) $495 plus (b) the average volume-weighted average price multiplied by 60.5274. The average VWAP is $16.6554.

The company will pay $1,000 of the amount in cash and the remainder in shares of class A common stock. Specifically, the number of shares will be the quotient of (a) the total value of the purchase price minus $1,000 divided by (b) the average VWAP.

The average VWAP means the sum of the daily VWAPs for each day of the averaging period divided by 10. The averaging period means the 10 consecutive trading days beginning on the ninth trading day preceding the pricing date and ending on the pricing date.

The total payment was to be neither less than $1,000 nor more than $1,631 per $1,000 principal amount of convertibles.

If the purchase price had been $1,631 per $1,000 principal amount of convertibles or more, the offer would have been automatically extended until midnight ET at the end of the second trading day following the pricing date.

The offer was conditioned on the receipt of tenders for at least $80 million principal amount of convertibles and the issue of at least $200 million of new senior subordinated notes by the expiration date.

The dealer managers are J.P. Morgan Securities LLC (800 261-5767), Bank of America Merrill Lynch (888 803-9655) and Wells Fargo Securities, LLC (800 326-5897). The exchange agent and information agent is Global Bondholder Services Corp. (212 430-3774 for banks and brokers and 866 857-2200 for others).

Sonic Automotive is an automotive retailer based in Charlotte, N.C. It began the offer on June 25.

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