Just 17 months after LMP Automotive Holdings Inc. bought its first franchised dealerships — and with public goals to grow to 80 to 100 stores by the end of 2022 — the small public auto retailer appears headed for dissolution, as it has agreed to sell six dealerships to Atlantic Coast Automotive Group.
LMP, in a regulatory filing Wednesday, said it entered into asset purchase agreements with Atlantic Coast Automotive on Aug. 5 for its Florida Kia dealerships in Port Charlotte and Cape Coral, plus Kia and Subaru stores in Mount Hope, W.Va., a Chevrolet dealership in Oak Hill, W.Va., and a Buick-GMC store in Beckley, W.Va.
LMP said it anticipates cash proceeds of $133 million from the deal, which is slated to close by Oct. 31, according to the filing with the U.S. Securities and Exchange Commission.
LMP's move to sell the six dealerships (a seventh dealership also is under a sales contract) and pursue a liquidation plan follows a tumultuous several months for the company.
In February, LMP revealed plans to terminate seven pending purchases of numerous dealerships and said it was exploring strategic alternatives for its business, including a possible sale of the company.
The company also faces a possible class-action lawsuit and has filed lawsuits seeking the return of deposits it made for dealership acquisitions it terminated.
By July, LMP said it had hired BofA Securities to help it seek strategic options for its auto retail business, the same month it announced it had terminated CFO Robert Bellaflores.
"It didn't work out," Sheldon Sandler, CEO of Bel Air Partners, a buy-sell advisory firm in Hopewell, N.J., said of LMP. "They didn't have the capital to get through it all."
Sandler, a former SEC chief examiner who helped guide heavy-truck dealer Rush Enterprises to an initial public offering in the mid-1990s, succinctly summed up LMP's rise and fall: "Early stage, big ideas and bang — never raised enough capital."
The $133 million in proceeds for the six dealerships slated to be sold to Atlantic Coast Automotive is just slightly more than what LMP paid for them in 2021.
LMP spent $127.4 million on those six franchised stores, plus three used-vehicle stores in West Virginia, according to the auto retailer's third-quarter 2021 regulatory filing. The used-vehicle stores do not appear to be part of the Atlantic transaction.