MUSCATINE, Iowa (March 21, 2003) — Tire Distribution Systems Inc. has agreed to sell 19 of its commercial tire outlets and nine retread plants in Louisiana, Mississippi and Arkansas in two separate transactions; the pending divestitures represent nearly a third of the Bandag Inc. subsidiary's annual sales.
The buyers are Southern Tire Mart L.L.C. in Columbia, Miss. — owned by two principals of the former Bandag dealership that TDS had purchased in 1997 — and Trans American Holdings L.L.C. in Fort Smith, Ark., a Bandag dealer since 1996.
Terms of the transactions were not disclosed. The Southern Tire Mart deal includes an option to purchase 10 TDS outlets and five TDS retread plants in Texas, Bandag said.
The pending divestitures — seven stores and three retread plants each in Louisiana and Mississippi to Southern Tire Mart and five stores and three plants in Arkansas to Trans American — are on top of the sale by Bandag of nine commercial and retail outlets in Tennessee earlier this year and the sale last year of several commercial and retail locations in Alabama, Georgia and Tennessee.
The proposed and completed divestitures reported combined sales last year $105.9 million and operating losses of $200,000. TDS reported sales overall last year of $364.9 million, with an operating loss of $11.4 million.
Despite the recent wave of divestitures, “Bandag is committed to TDS as it provides coverage and capabilities vital to the strength of the Strategic Alliance,” said Martin Carver, chairman and CEO of Bandag. “Fleet customers count on Bandag to have the coverage in place to serve their tire system needs. This objective is accomplished through independent dealers and TDS locations.”
The Trans American deal should close in the coming two weeks, Bandag said.
Southern Tire Mart's option for the Texas stores may be exercised at any time during the period beginning 18 months from the final closing of the sales and ending on a date 36 months from the final closing. Terms of the option were not disclosed. The proposed sale is subject to the execution of a definitive agreement and the continued availability of the buyer´s financing, Bandag said.