Car-Mart receives extension on defaults, time to review ‘strategic alternatives’
Rogers-based America’s Car-Mart Inc. said Friday (June 19) that its lenders have agreed to waive defaults and events of default and to provide covenant relief through early September, with the ability to extend to November. This is expected to provide the company with time to review its alternatives.
Shares of Car-Mart (NASDAQ: CRMT) were trading Monday (June 22) at $3.03, up 63 cents or 26.25%, in heavy volume. In the past 52 weeks, the stock has ranged between $1.38 and $62.72.
The company has entered into an amendment to its Oct. 30, 2025, credit and guaranty agreement with its lenders and administrative agent Silver Point Finance LLC. The company’s lenders previously agreed to extend the period of lender forbearance through June 12. Car-Mart received an additional extension to June 19 while the company and its lenders worked on the amendment.
“The amendment provides us the time to evaluate strategic alternatives and pursue an outcome that best serves our stakeholders,” CEO Doug Campbell said. “We appreciate our lenders’ cooperation and their agreement to provide us this time, and we are focused on executing on the milestones ahead.”
The amendment provides “covenant relief and a defined path forward as it works with its advisers to complete a review of strategic alternatives,” according to a news release. “A special committee of the company’s Board of Directors will continue to actively evaluate the full range of strategic and financing alternatives available to the company, with a focus on identifying the outcome that maximizes value for all of the company’s stakeholders.”
Under the terms of the amendment, the company must satisfy certain requirements, and the lenders have agreed to waive defaults and events of default under the credit agreement and to provide covenant relief through early September, with the ability to extend to November. This is expected to provide Car-Mart with “a workable timeline to advance its review of strategic alternatives.”
Car-Mart recently retained a global investment bank as the company considers “strategic alternatives,” including potential financing, recapitalization, mergers and acquisitions, and other transactions.
The company’s Board of Directors retained investment bank Houlihan Lokey Capital Inc., established a committee to oversee the company’s review of strategic alternatives and added a new board member, Adam Paul, president of AP Advisors LLC, to serve as chair of the new committee. The addition of the board member expanded the company’s board to 10 members.
Along with Paul as chair, the committee includes Joshua Welch and Jonathan Buba. The committee is expected to evaluate any financing, refinancing, or recapitalization transaction; raising capital through the issuance of equity securities; asset sales; review and modification of the company’s debt facilities; and other strategic alternatives. It will have authority to review, evaluate, negotiate, and make recommendations to the board regarding the strategic alternatives review and related transactions. The board retains the authority to approve any transaction following a committee recommendation.
Car-Mart is advised by Mayer Brown LLP as legal counsel, Houlihan Lokey Capital Inc. as investment banker, and FTI Consulting as financial adviser.
According to the release, “there can be no assurance that the company’s review of strategic alternatives will result in any transaction or other outcome, or as to the timing or terms of any such transaction or outcome. The company does not intend to comment further regarding the review unless and until it determines that further disclosure is appropriate or required.”
In April, Car-Mart closed 42 dealerships amid market challenges that affected its efforts to establish a “non-recourse revolving warehouse credit facility,” according to an April 7 filing with the U.S. Securities and Exchange Commission. By April 14, the company had 94 dealerships, down from 136.
In the company’s third quarter, which ended Jan. 31, Car-Mart reported a loss of $76.71 million, or a loss of $9.25 per share, compared to earnings of $3.15 million, or 37 cents per share, in the same period last year. Revenue declined by 12% to $286.79 million from $325.72 million. In the third quarter, Car-Mart completed the first two phases of a cost-control strategy, closing 18 dealerships. Its dealerships fell from 154 to 136 after those closures.