Interstate Auto Group Inc., a Minneapolis-based buy-here/pay-here auto lot operator, has acquired Auto Master from First Cash Financial Services Inc. No financial terms were disclosed. IAG is a portfolio company of Alpine Investors.
First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced that the operations of its Auto Master buy-here/pay-here automotive business unit have been assumed by Interstate Auto Group, Inc. (a multi-state buy-here/pay-here operator doing business under the name “CarHop”). As previously announced in September 2008, First Cash decided to exit the buy-here/pay-here automotive business through the sale or liquidation of its Auto Master business unit. Under the terms of this agreement, CarHop purchased Auto Master’s automobile inventories, assumed leases at all existing dealership locations and hired a significant number of Auto Master’s personnel. In addition, CarHop will manage the collection of Auto Master’s outstanding portfolio of customer notes receivable under a fee-based agreement.
CarHop is a privately-held buy-here/pay-here operator based in Minneapolis, Minnesota, which has been in business since 1996 and currently operates 24 auto sales locations in six states.
Rick Wessel, CEO of First Cash, said, “This transaction provides a timely and effective means for First Cash to exit the automotive business. We have liquidated our inventories for what we view to be a fair price and we expect to realize significant future cash flow from the collection of our existing notes receivable portfolio. The collection services aspect of the contract with CarHop provides a mechanism to collect on the existing portfolio of notes receivable and related finance charges through CarHop’s continued operation of the dealerships and collections operations. CarHop is an established industry operator with the ability to maximize the collections on this portfolio over the next 24 to 30 months.”
According to Mr. Wessel, “The cash flow and related tax benefits resulting from this transaction will support the continued expansion of First Cash’s pawn operations in Mexico and the U.S. and allow us to further reduce our outstanding debt. Looking ahead, our energy and resources will now be focused exclusively on our core pawn and short-term consumer lending businesses. These operations continue to be highly profitable, generate significant cash flow and provide opportunities for continued growth and profitability.”