March 10 is looking more and more like judgment day for Mercury Finance Co., the debt-riddled subprime auto lender trying to recover from a phony- accounting scandal.
Mercury hurtled deeper into debt Friday, defaulting on $77 million in commercial paper obligations, bringing the total it has defaulted on to $188 million. Another $122 million in commercial paper is due by the end of February and $139 million more in March, said Reilly Tierney, an analyst at Duff & Phelps Credit Rating Co.
Unless Mercury can receive extensions from these creditors, it must repay its $50 million revolving loan with BankAmerica Corp. by March 10, according to a report filed with the Securities and Exchange Commission Friday. The loan may be extended to June 30 if Mercury can receive extensions.
And commercial paper debts are not the end of Mercury's problems. The company also has $15 million in medium-term notes due the first week in March, Mr. Tierney said. A $10 million note is due in April.
Mercury is not paying its short-term debts because if it files for bankruptcy protection, the company wouldn't want to appear to have favored one kind of creditor over another, Mr. Tierney said.
Michael Durante, an analyst at Prudential Securities, said the $50 million loan could provide Mercury with enough cash to pay the interest, but not the principal, due on its commercial paper. Mercury officials late last week were likely negotiating with creditors to pay that interest, he said.
"The principal will be paid as part of a longer-term financing package," Mr. Durante said. "If they can't get one, it goes to bankruptcy court."
Mercury officials were not available for comment.