Lithia Motors Makes Progress on Store Divestitures; Raising Capital
MEDFORD, Ore., Oct. 3, 2008 - Lithia Motors, Inc. advanced another step forward in their restructuring plans announced on June 2nd with the sale of three more store locations. Lithia Dodge of Sioux Falls and Lithia Chevrolet of Sioux Falls were both sold to Billion Automotive on Monday, September 29th, and Lithia Chrysler Jeep Dodge of La Crosse in Wisconsin was sold September 30th to Pischke Motors of La Crosse.
Of the fifteen stores scheduled for divestiture, a total of six have already been successfully divested since July 1st. Two additional stores that were not on the original list were sold as a result of attractive unsolicited offers. The following is a re-cap of the progress made thus far to raise capital and right-size the company:
Net proceeds from all above transactions and financing activities are approximately $101.2 million since the beginning of the year, with $22.5 million in the first quarter and the balance of $78.7 million since the beginning of the second quarter.
In addition to raising the above capital, the Company has successfully reduced used vehicle inventory levels by approximately $50.0 million since the beginning of the third quarter. This strategy effectively reduces the floorplan obligations by the same amount.
Summarizing the progress so far, CEO and Chairman Sid DeBoer commented, “Six of the above stores that we sold were in our bottom-ten performers. The successful steps we have taken to divest these stores demonstrates our ability to generate liquidity from even our most unprofitable stores. We have received goodwill from the sale of most of these stores.”
Mr. DeBoer continued, “Despite the turbulent economy, Lithia continues to successfully execute our restructuring plan. We have shifted our domestic/import brand mix closer to the levels we are targeting. We have adjusted our geographic footprint, while raising capital and cutting costs. Moving forward with this plan will continue to strengthen our company and bring us into a stronger position to weather the current and future economic challenges.”