LMP Automotive board recommends liquidation to increase payout, company set to sell 6 dealerships

LMP Automotive Holdings Inc.’s board of directors has unanimously recommended that stockholders approve a proposed plan to liquidate and dissolve the company, while the publicly traded auto retailer has agreed to sell what looks like most of its franchised dealerships.

LMP said Monday that it has entered into dealership and real estate asset sale agreements for its Kia dealerships in Port Charlotte, Fla., and Cape Coral, Fla., as well as 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.

It’s not clear if LMP is selling the six dealerships in one transaction or in multiple deals. LMP said closing is expected in October.

The retailer said its board recommends that the company’s stockholders “vote to approve a proposed plan of liquidation of LMP’s assets and the dissolution of the company” at its next special meeting of stockholders. LMP did not indicate when the meeting is to take place.

“The board and the management team all believe that given the diversified nature of our portfolio, pursuing multiple transactions with different potential buyers for assets or groups of assets presents the best opportunity to maximize stockholder value,” CEO Samer Tawfik said in a statement. “We believe that the plan of liquidation will maximize stockholder value as we continue to sell our remaining assets. Management believes that upon completion of the plan of liquidation we expect that the company will be able to distribute approximately $115 million to $126 million to shareholders. Based on 10.9 million outstanding shares, that would indicate shareholders will receive $10.55 to $11.56 per share.

LMP’s stock closed at $6.73 a share Friday before jumping 11 percent to $7.49 in the morning Monday. The price had topped $20 a share within the past year.

The plan to liquidate the company marks the latest twist for LMP, which in early 2021 said it hoped to acquire 80 to 100 dealerships by the end of 2022.

In February, LMP said it was exploring strategic alternatives for its business, including a possible sale of the company. Last month, LMP said it hired BofA Securities to help it seek strategic options for its auto retail business. LMP also fired its CFO in July.

LMP said the plan of liquidation will allow the company to enter into “sales for its remaining assets not currently subject to sale agreements and to enter into value maximizing transactions without subjecting any such transaction to the delay and conditionality associated with having to seek and obtain stockholder approval.”

Last month, LMP said it signed an agreement to sell its Chrysler-Dodge-Jeep-Ram store in White Plains, NY, which it expects will generate $15.8 million. That transaction is expected to close in October.

The company has not reported a sales agreement for the one remaining franchised dealership in its portfolio, a Chevrolet-Buick-GMC-Cadillac store in Greeneville, Tenn., or any of its used-vehicle stores.

LMP hasn’t reported financial results for the fourth quarter of 2021 or the first or second quarters of this year and has said it will restate financial results for the first three quarters of 2021. The company also faces a possible class-action lawsuit and has filed lawsuits seeking the return of deposits it made for dealership acquisitions it later terminated.