Automotive News reported in June that the holding company owning most Prime assets had raised doubts in audited financial statements about whether it could continue as a going concern, given an expiring credit agreement for vehicle floorplanning, mortgages and other debt led by M&T Bank Corp.
In June, that credit agreement was extended from its previous expiration date of February 2022 to the end of December 2022, according to a July filing with the U.S. Securities and Exchange Commission by GPB Automotive Portfolio limited partnership — a holding company that owns 30 of Prime’s 31 dealerships. With the extension, along with an agreement to free up money controlled by Prime, the partnership said in a regulatory filing last week that it can now meet its financial obligations through at least Aug. 26, 2022.
A May 14 regulatory filing revealed the partnership was exploring options for Prime’s future, including a possible sale. That filing also indicated that some automakers since February had sent franchise termination notices or were threatening to terminate dealer agreements.
The partnership, in an August regulatory filing, said “all notices of terminations issued to our dealerships have been settled or resolved,” except those issued by Volkswagen and Audi of America.
Volkswagen on Aug. 10 issued notices of termination for Prime’s two Volkswagen stores as part of its “litigation strategy,” the partnership said in the August filing.
“We do not believe these notices of termination have any short-term impact and we will file protests pursuant to state law,” the holding company said in the filing.
In 2020, Volkswagen sued GPB in federal court in New York after GPB and Prime told Volkswagen they would not sell dealerships in Saco, Maine, and Norwood, Mass. Volkswagen claims GPB breached its business relationship agreement. It gave GPB 90 days to submit purchase agreements for three stores; GPB later sold one store in New York.
A June settlement conference between GPB and Volkswagen was unsuccessful.