AutoNation agrees to return PPP funds

AutoNation said Friday it would return $77 million in aid it acquired through the federal Paycheck Protection Program.

The Fort Lauderdalebased company said the aid was procured legitimately. On Friday, the Washington Post reported that AuoNation, which employed 26,000 employees in 18 states prior to the coronavirus outbreak, used separate tax identification numbers assigned to dealerships across the country to apply for at least $266 million in funds.

According to the Franchise Times, it had been possible for any business employing 500 employees or fewer per physical location to procure a PPP loan.

“A private equity fund could conceivably receive a PPP loan for its own office, and its portfolio companies could receive PPP loans for each of their store locations,” it said in a March 31 article.

But under new guidelines imposed by the Treasury Department this week, large companies like AutoNation that may be able to access capital markets would have to certify in good faith that the loan was necessary. AutoNation’s current market cap is $3 billion.

“It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification,” Treasury said.

Media reports said AutoNation had hoped to rehire 7,000 furloughed employees. On April 2, the publicly traded company announced 50% salary reductions for its Executive Chairman and CEO, 35% reductions for executive vice presidents, and 30% reductions for senior vice presidents and region presidents.

A representative for AutoNation did not respond to a request for comment.

Stories about larger entities who technically qualified for PPP loans but were seen to have violated the spirit of the program prompted backlash about who should be eligible. Other South Floridalinked businesses receiving PPP loans included a Coral Gables-based hotel owned by a large asset management firm, and the parent company of Florida fast-food franchise Pollo Tropical.

Auto dealerships have been among the hardesthit industries in the wake of the virus outbreak. South Florida magnate Norman Braman has furloughed most of the workers at his South Florida dealerships, while Asbury, a large automotive group based in Georgia, has laid off or furloughed about Florida 300 workers.