Pawn shop operator first Cash Financial Services Inc. said Monday it sold used car retail unit and lender, Auto Master, to Interstate Auto Group Inc.
Terms of the deal were not disclosed. Interstate Auto Group Inc., known as CarHop, is based in Minneapolis and operates 24 sales locations in six states in which the dealership backs car loans for consumers.
Pawn shop operator First Cash said in September that it would exit the buy-here/pay business, as the unit dragged down third-quarter results. First Cash reported a third-quarter loss of $46.4 million, or $1.54 per share, compared with year-ago profit of $10.4 million, or 32 cents per share.
First Cash acquired Auto Master in 2006, in an effort to expand its lending reach. But lower auto sales and losses in credit market — due to a growing number of defaulting on auto loans — prompted a sale of the unit.
First Cash sold all of the assets, leases and transferred most personnel to CarHop. The deal is expected to produce cash and tax benefits allowing First Auto to expand its pawn shop operations in the U.S. and Mexico.
Shares of First Cash rose 75 cents, or 4.3 percent, to $18.16 in morning trading.