CHARLOTTE, N.C.—J.H. Heafner Co. Inc. is now Heafner Tire Group Inc., a Delaware corporation with Goodyear as one of its stockholders. Executives of Heafner's owner, Charlesbank Capital Partners LLC, decided to reincorporate as a Delaware corporation to take advantage of the pro-business climate in that state, according to Heafner President and CEO Donald C. Roof.
"We feel the new name, Heafner Tire Group, reflects all the changes Heafner has gone through, all the acquisitions, etc.," he said, "and especially reflects our status as a national distributor."
Reincorporating in Delaware has no tax advantages for the company, he said, and involves no personnel or other changes. The company remains headquartered in Charlotte.
To effect the name change, J.H. Heafner Co. Inc. was merged into Heafner Tire Group Inc., effective Aug. 30, 1999.
Among the information filed with the Securities and Exchange Commission is a breakdown of the company's various stock categories, including Series B Cumulative Redeemable Preferred Stock, referred to in the documents as "Kelly Preferred Stock." The documents show Goodyear, via its Kelly-Springfield Tire Co. unit, owns 4,500 shares of the series A preferred stock at $1,000 a share, for a value of $4.5 million.
Goodyear's ownership of a stake of Heafner dates back to July 1997 when Heafner renegotiated the supply contract for its Winston brand. Prior to that, Cooper Tire & Rubber Co. had made Winston tires. From that point forward, Kelly took over production of Winston tires, adding them to the Regul private brand it already made for Heafner.
The documents also spell out Heafner's buying agreements with Kelly-Springfield covering the Winston brand.
The minimum purchase—provided Kelly can deliver—for 1998 was $60 million, for 1999 this rises to $80 million, and for 2000 and beyond, the amount rises 4 percent a year over the previous year's final tally.
Should Heafner not reach the minimum purchase targets, Kelly is entitled to dividends based on a sliding scale that ties unit purchases and interest rates together.
Heafner has a buy-out option on the Kelly share, to take effect June 30, 2007.
Separately, Heafner Tire Group reported increased sales and earnings for the third quarter and for the nine months ended Sept. 30.
Sales for the quarter rose 7.7 percent to $267.4 million, whereas sales for the nine months were up 57.3 percent to $773.2 million. Operating earnings before tax rose 19.1 percent for the quarter to $10.6 million, and 79.5 percent for the nine months to $29.8 million.
Heafner expects fiscal 1999 sales to exceed $1 billion, with company sales growth exceeding the industry growth rate, and earnings growth outstripping sales growth.
An accompanying story about Heafner Tire Group is on page 1.