The scandal-ridden proprietor of Prime Automotive Group, which operates seven dealerships in Maine, is promoting the chain to a Texas-based firm.
Group 1 Automotive Inc. of Houston issued a information launch Monday saying it has entered into an settlement to buy Prime Automotive from GPB Capital Holdings, a New York funding agency that has turn out to be the goal of investor lawsuits and prison allegations. Phrases of the acquisition settlement weren’t disclosed.
GPB Capital has been swirling in controversy for years, capped in February when its chief government was arrested and charged with fraud. Nonetheless, Prime Automotive has continued to function efficiently, based on the discharge, with its 30 dealerships producing $1.8 billion in income in 2020, promoting over 52,000 new and used autos.
Group 1 is a Fortune 500 automotive retailer with 188 dealerships in america, United Kingdom and Brazil, based on the discharge. It’s a publicly traded firm whose shares are offered on the New York Inventory Change below the image GPI. The corporate can also be closely invested in on-line automobile gross sales by its AcceleRide.com web site.
“Group 1 has efficiently operated within the Northeastern U.S. for a few years. We’re happy to have this chance to leverage our current price construction and to additional diversify our U.S. footprint,” mentioned Earl J. Hesterberg, Group 1’s president and CEO, within the launch.
Prime Automotive operates 30 dealerships and three collision facilities within the Mid-Atlantic and New England markets together with Prime Toyota, Prime Volkswagen, Prime Ford, Prime Chrysler Dodge Jeep RAM and Prime Honda, all in Saco.
Along with the fraud prices and lawsuits filed by traders, GPB Capital is being sued by David Rosenberg, whose late father, Ira Rosenberg, constructed a string of dealerships in Maine after which offered them to the funding agency in 2017.
David Rosenberg, who was initially named head of the dealerships by the brand new proprietor, was fired after he reported considerations over the monetary dealings of GPB Capital and Prime Automotive. Rosenberg’s swimsuit alleges that GPB Capital has not purchased again his possession stake in Prime Automotive as was outlined in his employment contract.
GPB Capital and its associated entities additionally faces lawsuits filed by a Texas legislation agency, which alleges the corporate defrauded traders of $1.8 billion; and the Commonwealth of Massachusetts, which mentioned 180 traders within the state have misplaced $14 million.
These lawsuits echo a lot of Rosenberg’s allegations. He mentioned the mum or dad agency promised to pay traders from income, however as an alternative used cash from new traders to pay those that had put in cash earlier than. In that manner, he mentioned, it operated like an unlawful Ponzi scheme.
Each Toyota and Volkswagen have threatened to revoke franchise agreements with their affiliated Prime Automotive dealerships in Saco on account of alleged breaches of contract stemming from the ouster of David Rosenberg. The automakers have demanded that the dealerships be offered or Rosenberg be reinstated as CEO.
In its announcement Monday, Group 1 mentioned the Prime Automotive acquisition will enable it to develop operations in each the bodily and digital realms.
“We all know Prime’s markets properly and the alternatives they symbolize,” mentioned Group 1 Senior Vice President and Chief Monetary Officer Daniel McHenry within the launch. “We’re additionally proud to welcome Prime Automotive’s 1,800 workers as new teammates to the Group 1 household.”
Group 1 operates dealerships in close by Massachusetts and New Hampshire, however the Prime Automotive acquisition would symbolize its first enlargement into Maine.