The partnership in 2020 sold 14 Prime stores. Last year, Prime said it planned to use money made from dealership sales in outlying states to buy more stores in its core Northeast market. But its credit agreements bar it from making additional dealership acquisitions of more than $2 million, according to the filing.
The partnership is considering a number of options ranging from “co-investments, a spin-off of businesses, a public listing or merger or a sale of individual dealerships or groups of dealerships,” according to the filing.
“We may also consider disposing of dealerships to provide operational liquidity to the partnership.”
GPB Capital, as the partnership’s general partner, has a fiduciary responsibility to maximize asset values for investors, the GPB spokesman told Automotive News. GPB is evaluating options such as a sale with a strategic partner or doing some type of public transaction, he acknowledged.
The partnership posted a net loss of $7.4 million last year, better than the two prior years of larger net losses.
GPB said the partnership has expenses related to managing the fund such as audit and tax preparation fees, management assistance fees and legal fees that reduced the partnership’s profitability.
GPB Automotive Portfolio’s net loss attributable to the partnership, a different metric than net loss, was $19.3 million in 2020, the filing said.
GPB Capital’s interim CEO Rob Chmiel wrote in a May 17 letter to GPB Automotive Portfolio investors that after “significant asset impairment charges” were taken in 2018, Prime’s new management in the past two years has trimmed operating expenses by $94.9 million, cut liabilities by $335.6 million through selling dealerships and cutting expenses, and boosted cash on hand by $80.7 million.
“The audited financial statements underscore we have significant work to do,” Chmiel wrote in the letter, which was obtained by Automotive News.
“However it also demonstrates that our operating trend lines across expenses, profitability and cash flow generation are on an improved trajectory.”