REXDALE, Ontario—United Tire & Rubber Co. Ltd., maker of large off-the-road tires, 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.
However, as United was being shopped, Sanford Pensler, president of Pensler Capital, which owns 81 percent of the Canadian tire maker, said his company intends "to make a proposal so we can retain the company" and restructure it financially, rather than sell it.
He confirmed that the off-the-road tire maker and distributor is losing money. Since Pensler Capital bought its majority stake in 1996, United Tire changed some of its product offerings at increased costs and expected a faster buy-in for those products than what developed, Mr. Pensler said.
Joe Pernica of Ernst & Young Inc., United Tire's receiver and manager, said his firm accepted bids on the tire maker's assets until 5 p.m. March 3. Several bids or requests for information were made, though he would not reveal how many or by whom.
Included among the assets are 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 plant, which employs 50. The company had sales just below $18 million in 1999, according to its unaudited internal financial statements. It posted sales of $27 million in 1996, the year Pensler entered the picture.
The company has assets of $7.96 million and liabilities of $6.4 million, the statements say.
After the deadline, Ernst & Young planned to assess the offers it obtained and decide with which parties to continue discussions, Mr. Pernica said, explaining that the firm has the option to sell United piecemeal if a suitable offer is not made.
Mr. Pensler said he understands that his firm could lose United Tire through the process. "If we're going to financially restructure, our offer has to be better than everyone else's. We're going to bid on it and, hopefully, reorganize so we can be a strong entity going forward in our business."
One group of suppliers to United Tire is submitting its own bid, concerned the company won't be sold for its true value and worried they'll be hurt financially.
Robert L. Hagerman, president of Toronto-based AirBoss of America Corp., one of the suppliers, said his firm is owed $600,000 and the group $3 million collectively.
The loss of United Tire's business could reduce AirBoss' income by 3 to 4 percent in 2000, he estimated.
Mr. Pensler admitted there are payables out there, adding that they "are part of the pool of liabilities that are reviewed in a restructuring."
United Tire is continuing to operate as it did before it entered receivership, Mr. Pernica said. Tires are being shipped and no employees have been laid off in Rexdale.
Pensler Capital—which in 1996 also bought United Tire's largest customer, Denman Tire Corp. in Leavittsburg, Ohio—posted an estimated $98 million in tire sales in 1998. Charles Wright, president/CEO of Denman, also served as chairman at United Tire.
In 1998, soon after purchasing the shares of former United Tire owner Charles Sherkin, Mr. Pensler said he wanted to integrate the operations of United Tire and Denman.
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.