Pendragon has completed the £17.2 million disposal of its Chevrolet car dealership in Puente Hills, California.
The AM100’s third-placed franchised retail group announced the transaction in a statement issued via the London Stock Exchange this morning (August 16).
A statement issued by the group said: “The Transaction is in-line with the company's stated strategy of disposing of its US Motor Group and follows the disposal of two dealerships in California for a consideration of approximately GBP £60 million, which was announced in May 2019.”
On April 2 Pendragon announced the successful disposal of the trade and assets of its Jaguar Land Rover businesses in Mission Viejo and Newport Beach, California, as part of a bid to retrieve £100m from its operations across the Atlantic.
Scott Biehl, the operator of a privately owned dealership group, has acquired the Puente Hills Chevrolet site, has acquired the Chevrolet dealership in Puente Hills.
Pendragon said that the total consideration for the transaction is expected to be approximately £17.2m, to be satisfied entirely in cash payable at completion, with the precise amount being determined following the preparation of completion accounts.
As at December 31, 2018, the gross assets that are the subject of the Transaction amounted to £42m million and the loss prior to central costs amounted to GBP £0.6m, it said.
Pendragon added: “The proceeds of the Transaction will be initially used to reduce net debt.
“Completion of the Transaction is subject to a number of conditions, including, inter alia, the purchaser securing funding approval.”
General Motors, as the OEM, will have a right of first refusal over the trade and assets that are the subject of the Transaction, it added.
In an article in The Sunday Times this week, columnist Sam Chambers told readers of his 'Inside the City' section to avoid Pendragon shares.
Chambers cited disruption inn the wider automotive retail sector as uncertainty surrounding the group's strategy following the June departure of chief executive Mark Herbert, who had been in-post for just three months after taking the helm from the former AM100-topping group’s founder Trevor Finn.
Herbert left Pendragon just a fortnight after he published the findings of a preliminary review of the group’s profitability and strategic focus in the face of ongoing slump in its financial fortunes.
In a statement issued on June 12, Pendragon said that it needed to refocus its Car Store used car supermarket strategy as it seeks out “self-help opportunities” in light of an operational business review which predicted that the group would make a significant loss in H1, 2019.
The results of an initial business review conducted by new chief executive Mark Herbert and his leadership team at the once AM100-topping group stated that it expected to be to be “significantly loss making” in the first half of the year, with a small loss in underlying pre-tax profits for 2019 as a whole.
Considering the performance of each of Pendragon’s areas of business on an “as is” basis, the group found that accelerated losses from the Car Store business, an excess of used car stock, lower than anticipated new car margins and increased costs – particularly in aftersales – would all hamper its 2019 performance.
The statment said that £11.9m losses incurred by the Car Store division in 2018 would accelerate to over £25m this year, principally as a result of “execution inefficiency and the impact of excess used car stock”.
Pendragon held £458m worth of used car stock at the end of 2018, compared to £372m a year earlier, it said.