REXDALE, Ontario (Feb. 25, 2000) — Large off-the-road tire maker United Tire & Rubber Co. Ltd. went into provincial receivership Feb. 15 and has placed itself on the selling block.
The Rexdale-based company, which is majority-owned by Pensler Capital Corp., a New York firm, has had financial difficulties, according to Charles Wright, president and CEO of Denman Tire Corp. Denman also is owned by Pensler, and Mr. Wright served as chairman at United Tire.
"The situation is being worked on," Mr. Wright said. "I´m sure they´ll get it squared away."
United Tire went into receivership with the purpose of being sold, not reorganized, said Joe Pernica of Ernst & Young Inc., the company´s receiver and manager.
Ernst & Young is soliciting offers for the purchase of the firm´s assets, including production machinery and equipment; raw materials, work-in-process and finished goods; accounts receivable; office furniture and equipment; intangible and intellectual property; and selected equipment leases. United Tire leases its Rexdale plant, where it employs 50.
Pensler President Sanford Pensler did not return telephone calls seeking comment.
According to the company´s unaudited internal financial statements, United Tire had sales of just below $18 million in 1999. The company posted sales of $27 million in 1996, the year it was purchased by Pensler.
The firm has assets of $7.96 million and liabilities of $6.4 million, the statements say.
At least one advertisement requesting offers for United Tire assets ran in the Feb. 22 issue of The Globe and Mail newspaper in Toronto. Offers or requests for information will be received until 5 p.m. March 3, Mr. Pernica said.
As of Feb. 24, the firm had fielded several requests for information about United Tire, he said.
Robert L. Hagerman, president of Toronto-based AirBoss of America Corp., said one of United Tire´s big problems is it owes his company and several others "a pile of money." AirBoss produces raw materials for United Tire.
Concerned the company won´t be sold for true value and the suppliers would be hurt financially, AirBoss and two to four other creditors—who together are owed about $3 million—are putting together their own bid to buy United Tire, Mr. Hagerman said. The group wants to add a partner that has experience in tire distribution, he said.
United Tire owes AirBoss more than $600,000, Mr. Hagerman said. The loss of United Tire business could reduce AirBoss´ income by 3 to 4 percent in 2000, he estimated.
While United Tire is being shopped, Mr. Pernica noted that the company still operates as it did before entering receivership. Mr. Wright said Denman, United Tire´s biggest customer, received a shipment of tires from the company on Feb. 21.
No employees at the Rexdale facility have been laid off, and any decisions at the plant would have to be approved by Ernst & Young, he said.
After the March 3 deadline, Ernst & Young will assess any offers it has and decide with which parties to continue discussions, Mr. Pernica said. The firm has the option of entering into an agreement before the deadline or selling the company piecemeal if a suitable offer is not made, he said.
Pensler purchased its majority stake in United Tire in 1996 and, after buying the shares of former United Tire owner Charles Sherkin in 1998, owned 81 percent of the company.
Soon after purchasing Mr. Sherkin´s shares, Sanford Pensler said he wanted to integrate the operations of United Tire and Denman, which his company also bought in 1996.
United Tire was established as a tire distributor by Mr. Sherkin´s brother, Harry, in 1944. Charles and two other Sherkin brothers joined the business.
The company began producing tires a few years later after facing supplier problems. During the 1950s, United moved into several areas: It introduced underground mining and forestry tires to the industry, retreaded tires and became exclusive distributor in Canada and parts of the U.S. for Bridgestone Corp.´s OTR tires.
At its peak in 1981, the firm employed more than 800 and posted $65 million in revenue.