America’s Car-Mart has bought itself more time. In a June 12 SEC filing, the buy-here, pay-here operator said its lenders agreed to extend their forbearance period through June 19, giving the company additional room to finalize an amendment to its credit agreement. Car-Mart said the parties have made “significant progress” and are nearing a deal that would resolve concerns over anticipated defaults, at least on an interim basis.
The forbearance, led by agent Silver Point Finance, traces to anticipated breaches of minimum liquidity and collateral coverage covenants, along with certain reporting obligations. Bloomberg reported the company has been seeking at least $500 million in fresh capital to close a liquidity gap and repay existing lenders.
The strain has been building for months. Car-Mart has closed roughly 60 dealerships since November, including 42 locations announced in April. Fitch Ratings has pointed to delinquency rates near 6% among lower-credit borrowers as a pressure point.
As one of the largest publicly traded BHPH operators, Car-Mart’s restructuring effort offers a closely watched read on the financial pressures facing the deep-subprime segment.
