LMP closes in on first dealerships

LMP Automotive Holdings Inc., the publicly traded vehicle subscription company and used-car retailer, is getting closer to purchasing its first franchised dealerships.

The small company, which last year said it aspires to roll up dozens of franchised dealerships, now expects to close this month on the purchase of eight franchised stores, plus some used-vehicle stores, following a deal it made with a bank to secure $192 million in financing.

"It's a transformative event," LMP CEO Samer Tawfik told Automotive News last week. "We're happy with where we are."

LMP also said it had gotten its first automaker approvals, from General Motors.

But LMP also terminated one transaction, its first planned franchised dealership acquisition.

LMP said it and the seller of Newnan Toyota in Georgia last month agreed to terminate a July purchase agreement. LMP was to buy a 75 percent stake in the store from Walt Gutierrez for $27 million. LMP, in a regulatory filing last month, said the Dec. 18 action did not include any "material termination penalties."

It's not clear why the deal didn't move forward. Tawfik declined to disclose the reasons.

Southeast Toyota Distributors, the distributor for 177 Toyota stores in five Southeast states including Georgia, would have needed to sign off on the sale. A spokeswoman for JM Family Enterprises, which operates Southeast Toyota Distributors, declined to comment when asked whether it had approved LMP and the sale.

Tawfik did say that parting ways on the transaction "had nothing to do with the factory or Southeast [Toyota.] It was just between the buyer and seller."

Gutierrez did not respond to requests for comment.

Sheldon Sandler, CEO of Bel Air Partners, a buy-sell advisory firm in Hopewell, N.J., said that Toyota is particularly tough on approving newcomers as dealers.

Tawfik said LMP's first wave of acquisitions are targeted to close sometime next week.

The wave is slated to include Fuccillo Kia of Cape Coral and Fuccillo Kia of Port Charlotte, both in Florida; the Bachman-Bernard Chevrolet-Buick-GMC-Cadillac store in Greeneville, Tenn.; and an 85 percent stake in five franchised dealerships in West Virginia. The West Virginia stores are Hometown Kia and Hometown Subaru in Mount Hope; Hyundai of Beckley; Beckley Buick-GMC Automall; and King Coal Chevrolet in Oak Hill. LMP also will buy some used-only stores in West Virginia.

As of last week. LMP was waiting on automaker approval from Kia, Hyundai and Subaru. LMP said it had received approval from GM to buy the Chevrolet and Buick-GMC stores in West Virginia, which GM confirmed.

Richard Aldahan, LMP's COO, said the company was awaiting final approval from GM to buy the Tennessee store.

LMP now has some financing secured for acquisitions. The company said last month that Truist Bank had committed $192 million in financing for the first stage of acquisitions, subject to Truist terms and conditions.

Tawfik, in a statement, said some of the financing would be for new- and used-vehicle floorplanning and working capital.

In December, LMP also said it had chosen Truist Securities Inc. as "lead arranger" for up to $660 million in funding through credit facilities.

At the end of September, LMP had just $3.3 million in cash, down from $17.7 million at the end of the second quarter.

LMP in October agreed to buy a 70 percent stake in John Staluppi Sr.'s Atlantic Auto Group of New York. LMP agreed to pay $425.6 million for the stake in 17 dealerships, plus a related logistics company.

LMP said at the time that the deal would close in January.

Tawfik declined to comment on whether LMP had received any automaker approvals for the Atlantic deal, which includes Toyota, Lexus, Chevrolet, Hyundai, Genesis and Honda brands. And he said he could not comment on when the deal may close, though an update is expected this week.

LMP continues to look at more deals, Tawfik said, and has "multiple letters of intent" to buy dealerships beyond those already announced.

He said LMP has reached the "big leagues" with other publicly traded auto retailers now that it has received approval from GM and a financing commitment and financing infrastructure.

"We anticipate some interesting deals going forward over and above what's been contracted," Tawfik said.