NATCHEZ, Miss.—Titan Wheel International Inc. plans to buy a majority stake in Condere Corp. and its Fidelity Tire plant in Natchez. But there are so many variables—and disputes—impacting the acquisition that the fate of the Fidelity plant is uncertain. The saga began in early March when a group of Condere shareholders decided they wanted to sell their stake in the Hamden, Conn.-based company, which also operates the TTS Corp. truck tire emergency service and three remaining ServisFleet commercial tire outlets. They asked Galaxy Tire Inc., Condere's largest shareholder, on March 2 to buy their shares at $2.50 a share, according to Galaxy COO Bryan Ganz.
Galaxy accepted the offer March 31, but the shareholders believed the offer was only valid for 10 days and when Titan came in to offer $3.50 a share, the sellers accepted.
Galaxy disputes the validity of the contract and had sought a temporary restraining order in a Mississippi court to block Titan's acquisition. But the other Condere shareholders won a reversal in federal court, according to Titan CEO Maurice Taylor Jr.
Galaxy is considering several options, including a lawsuit, but is waiting to see if the Federal Trade Commission approves Titan's acquisition under federal antitrust laws. Mr. Taylor said his company planned to file the necessary FTC paperwork April 23 and the FTC was expected to respond in 15 days.
Meanwhile, the rumors are flying about Titan's plans for the Fidelity plant, which produces about 10,000 units daily of radial and bias commercial, industrial and farm tires for the replacement market and for private branders, such as Galaxy Tire.
Mr. Taylor said the Fidelity plant has a lot of problems and is losing money, but Titan needs more tire production capacity.
Quincy, Ill.-based Titan is a tire-and-wheel assembly manufacturer which built its empire by acquiring troubled facilities. Its Titan Tire Corp. subsidiary operates the former Pirelli Armstrong Tire Corp. farm tire plant in Des Moines, Iowa, and the Dico Tire Inc. industrial tire plant in Clinton, Tenn., and is constructing a tire plant in Brownsville, Tex., due to begin operations in the fourth quarter.
Mr. Taylor said he has been amazed by all the inquiries from all fronts wondering about Titan's plans for the Fidelity tire plant.
``We don't even own it yet,'' Mr. Taylor said. ``There are so many unknowns.''
The confusion is shared by Titan's competitor, Galaxy Tire.
It was just last September that Galaxy purchased a 23-percent stake in Condere to finance the expansion of the Fidelity plant so Galaxy could transfer some of its overseas tire production stateside.
Now Galaxy is pulling out molds the Fidelity plant used to produce Galaxy's bias OTR and specialty tires for the OE and replacement markets. ``Many of the tires we built at Fidelity were unique,'' Mr. Ganz said, including tires for John Deere golf course tractors and Galaxy's Beefy Baby skid steer tires. ``We are concerned that proprietary information will fall into Titan's hands.''
Mr. Ganz estimated the Fidelity plant production contributed to about 14 percent of Galaxy's annual sales of $70 million. Relocating production from the Fidelity plant to other, as yet undetermined, plants ``is not a fatal blow, but it is a setback,'' Mr. Ganz said, especially considering that all the production development conducted during recent months at the Fidelity plant will have to be repeated somewhere else.
Galaxy doesn't relish the idea of sharing ownership—and revealing proprietary information—with its competitor in the OTR tire market, so Galaxy is seeking a way to sell its shares in Condere.
Mr. Ganz said Titan's offer for Galaxy's interest in Condere wasn't as sweet as the one made to the other shareholders. Plus, Titan wanted Galaxy to waive its legal rights. ``We're not willing to do that since we feel we had a binding contract (with the shareholders),'' Mr. Ganz said.
A lawsuit is still an option, but ``it would be foolish to make any decision at this point,'' Mr. Ganz said.
Galaxy does want out, however, especially amid fears that Titan might put the tire plant in bankruptcy, further diluting Galaxy's investment in the plant, according to Mr. Ganz.
``We're caught between a rock and a hard place,'' Mr. Ganz said. ``We don't want to lose the $4.4 million we invested just four months ago.''
In addition to the bankruptcy speculation, there are rumors that Titan plans to lay off 100 plant workers. But Titan's Mr. Taylor said he has made no announcement of Titan's plans for the plant and won't until the acquisition is finalized.
Without being specific, Mr. Taylor said the plant needs improvements on every level. ``We hope to set up production at the plant. The place has been losing millions and millions of dollars.''
In March, Condere sold all but three of its 12 ServisFleet locations to Tire Centers Inc. in an effort to concentrate on its core business of tire manufacturing. Mr. Taylor said the three remaining outlets could serve as distribution centers for his company.
But until Titan reviews all the assets, the company isn't announcing any concrete plans, according to Mr. Taylor.
The Condere purchase process is ``a real mess'' because of what Mr. Taylor called ``goofy agreements'' among a number of major Condere shareholders that include pooling interest and certain specifications in the event of a buyout offer.
``Up until the final sale, we don't know who's selling and who's not,'' Mr. Taylor said. He also said he won't have a final purchase price until the details are cleared up.
Meanwhile at the Fidelity plant, United Steel Workers of America Local President Leo Bradley, who represents 403 union workers among the 500 employed at the plant, said there is concern about what will happen under new ownership.
Until the union officials meet with Mr. Taylor and find out what his plans for the plant are, the workers are in a ``sit-and-wait'' mode, Mr. Bradley said.