ALLIANCE, Ohio (April 9, 2014) — American Tire Distributors Holdings Inc. (ATD), which recently completed its acquisition of Terry’s Tire Town Holdings Inc., is shutting the firm’s Alliance operations and plans to close its distribution center in June.
Ron Sinclair, ATD senior vice president, said Terry’s Tire’s distribution business will be consolidated into six of its own distribution centers in Ohio and Pennsylvania. In addition, ATD will transition many of Terry’s headquarters roles to its North Carolina field support center between now and year-end.
“ATD operates multiple distribution centers in Ohio, including Canton, Cleveland, Cincinnati and Columbus,” Mr. Sinclair said. “In addition, we have distribution centers in Pittsburgh, Pa., and Poca, W.Va. These six distribution centers will service the same geographic area as the Terry’s distribution center in Alliance.”
Mr. Sinclair added that with six centers and “a broader and deeper product offering,” ATD is confident “the service to our customers will increase.”
Many of the 150 Terry’s Tire employees in Alliance will have employment opportunities with ATD, both at its Ohio distribution centers and its North Carolina field support center, Mr. Sinclair said, though he did not disclose how many would likely be retained.
ATD purchased Terry’s Tire for approximately $365.6 million, which includes the assumption of $2.2 million in debt. The purchase price is $20 million higher than ATD disclosed in mid-February, and the final price could still be as much as $15 million more than the $365.6 million, ATD said in an 8K filing with the Securities and Exchange Commission.
The final price is contingent upon certain post-closing events, including, but not limited to, working capital adjustments, ATD said.
ATD financed the acquisition through a combination of borrowings under a new senior secured term loan facility and borrowings of approximately $72.5 million under the firm’s existing U.S. ABL facility.
In connection with the acquisition, ATD entered into a credit agreement that provides for a senior secured term loan facility in the aggregate principal amount of $300 million, with a discount of 0.25 percent, which, combined with debt issuance costs, resulted in net proceeds of approximately $290.9 million.
Alliance -based Terry’s Tire and its subsidiaries are engaged in the business of purchasing, marketing, distributing and selling tires, wheels and related tire and wheel accessories on a wholesale basis to tire dealers, wholesale distributors, retail chains, automotive dealers and others, retreading tires and selling retread and other commercial tires through commercial outlets to end users and selling tires directly to consumers via the Internet.
Founded in 1972 as a single retail store, at the time of the purchase by ATD Terry’s had 10 distribution centers in nine states and a commercial tire operation. Its sales in 2013 were about $500 million, ATD said earlier, with an adjusted EBITDA of approximately $14 million.
How have tire prices been in the last few months?
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