Sonic Automotive, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt (Tables)

Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2018

Long-term debt consists of the following:



	June 30, 2018			December 31, 2017
	(In thousands)
2016 Revolving Credit Facility (1)	$	17,396		$	75,000
5.0% Senior Subordinated Notes due 2023 (the “5.0% Notes”)	289,273			289,273
6.125% Senior Subordinated Notes due 2027 (the “6.125% Notes”)	250,000			250,000
Mortgage notes to finance companies-fixed rate, bearing interest from 3.51% to 7.03%	229,828			199,972
Mortgage notes to finance companies-variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR	192,767			219,719
Debt issuance costs	(12,121		)	(13,208		)
Other	3,771			3,947
Total debt	$	970,914		$	1,024,703
Less current maturities	(37,786		)	(61,314		)
Long-term debt	$	933,128		$	963,389


(1)	The interest rate on the 2016 Revolving Credit Facility (as defined below) was 225 basis points above the London Interbank Offer Rate ("LIBOR") at both June 30, 2018 and December 31, 2017.

Financial Covenants Include Required Specified Ratios

Sonic was in compliance with the covenants under the 2016 Credit Facilities as of June 30, 2018. Financial covenants include required specified ratios (as each is defined in the 2016 Credit Facilities) of:



	Covenant
	Minimum Consolidated Liquidity Ratio	Minimum Consolidated Fixed Charge Coverage Ratio	Maximum Consolidated Total Lease Adjusted Leverage Ratio
Required ratio	1.05	1.20	5.75
June 30, 2018 actual	1.13	1.43	5.05

Summary of Interest Received and Paid under Term of Cash Flow Swap

Under the terms of the interest rate cap agreements, Sonic will receive and pay interest based on the following:



Notional Amount		Pay Rate (1)	Receive Rate (2)	Start Date	End Date
(In millions)
$	250.0	2.000%	one-month LIBOR	September 1, 2017	June 30, 2018
$	375.0	2.000%	one-month LIBOR	July 1, 2018	June 30, 2019
$	375.0	3.000%	one-month LIBOR	July 1, 2018	June 30, 2019
$	312.5	2.000%	one-month LIBOR	July 1, 2019	June 30, 2020
$	250.0	3.000%	one-month LIBOR	July 1, 2019	June 30, 2020
$	225.0	3.000%	one-month LIBOR	July 1, 2020	June 30, 2021
$	150.0	2.000%	one-month LIBOR	July 1, 2020	July 1, 2021
$	250.0	3.000%	one-month LIBOR	July 1, 2021	July 1, 2022

(1)

Under these interest rate cap agreements, no payment to or from the counterparty will occur unless the stated receive rate exceeds the stated pay rate, in which case a net payment to Sonic from the counterparty based on the spread between the receive rate and the pay rate will be recognized as a reduction of interest expense, other, net in the accompanying condensed consolidated statements of income.


(2)	The one-month LIBOR rate was approximately 2.090% at June 30, 2018.

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

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+ Details