Sonic Automotive Could Go Bankrupt, Drop from NYSE
Sonic Automotive says it may file for bankruptcy if it can't restructure more than a billion dollars in debt it owes this year. The Charlotte-based car dealer is one of the nation's largest and is run by Bruton Smith, owner of Lowe's Motor Speedway. During a conference call with investors this morning Sonic President Scott Smith said the company planned to cover the debt through car sales and by borrowing money in the market. With auto sales - and Sonic's stock price - in decline, Smith says neither panned out. "And I don't think anybody really anticipated the markets freezing as they have," said Smith. "It hasn't happened in my life time. So those things kind of cut the legs out of that strategy." While on the phone with investors, Sonic executives avoided any mention of bankruptcy. However, the company's 2008 report filed with federal regulators yesterday states that if Sonic is unable to restructure the debt, it may not be able to continue operations or avoid filing for bankruptcy protection. The report also warns that Sonic is in danger of being de-listed from the New York Stock Exchange. The fourth quarter of 2008 was particularly tough for the Fortune 500 company, with a loss of 658-million dollars compared to a profit of 26-million the year before.