America's Car-Mart stock shot up Monday after the used-car retailer and subprime auto lender announced a key amendment to its credit agreement, easing near-term liquidity fears that had hammered the shares in recent weeks.
The amendment with Silver Point Finance and its lenders provides covenant relief and waives certain defaults. The initial relief period runs through early September, with an option to extend to November under specific conditions. The goal: preserve liquidity while a Special Committee of the Board of Directors evaluates financing and strategic alternatives.
“The Amendment provides us the time to evaluate strategic alternatives and pursue an outcome that best serves our stakeholders,” said CEO Doug Campbell in the announcement.
The news comes after a Bloomberg report earlier this month that America's Car-Mart had been pursuing an eleventh-hour capital raise to stave off a potential bankruptcy filing, as a cash crunch pushed the company to the brink of default. The report noted that lenders in the subprime auto finance market have been struggling with challenging conditions, as high inflation and elevated interest rates strain lower-credit borrowers.
Investors clearly saw the amendment as a lifeline. Shares of America's Car-Mart (CRMT) were up 29.79% at $3.12 at the time of publication Monday, according to market data.
