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Sonic Automotive drops after delay in annual report filing

Sonic Automotive (SAH) is sinking after the company disclosed in a regulatory filing earlier today that it would delay filing its annual report to the SEC due to a material weakness in its dealership level accounting processes. Sonic said it’s in the process of completing the report and that it believes final financial results will be the same as reported on February 20. The company also indicated that it had amended a credit agreement. Sonic said that the change to its credit agreement would eliminate the company's pledge of 5M shares of Speedway Motorsports (TRK) as collateral for the amount due under a credit facility. The use of the stock as collateral had increased Sonic's borrowing availability by $33.5M as of December 31, Sonic stated. The company said the change would reduce its liquidity, but it added that it still believes that it has enough liquidity to conduct its operations and meet the terms of its debt agreements. The lenders that extended the amended credit facility, which was worth a maximum of $175M before the recent change, do not object to Sonic's material weakness statement, Sonic reported. As a result, Sonic said it will not be in default under the terms of the credit agreement. In early afternoon trading, Sonic gave back $1.10, or 4.5%, to $23.25.