BOUCHERVILLE, Quebec—Pneus Unimax Ltd., franchisor of the Unipneu tire retail program, has offered to buy all the assets of Tirecraft Group Inc., which filed for bankruptcy protection April 15.
Pneus Unimax's offer has been approved, pending certain conditions, by the Court of Queen's Bench of Alberta, the presiding legal entity over Tirecraft's filing. Terms of the deal were not disclosed.
“In line with our previously announced intention to expand the Unipneu banner to Ontario, the acquisition of Tirecraft's assets constitutes a strategic decision that complements our vision of growth,” said Pneus Unimax President and CEO RenÃ&Copy; GÃ&Copy;linas, in a prepared statement.
“The potential acquisition of Tirecraft is excellent news since by doing so we will penetrate the out-of-Quebec market by acquiring an integrated organization operating in all major cities across Canada,” he said.
Boucherville-based Pneus Unimax said it coordinates Quebec's largest tire distribution network with 86 independent dealers-shareholders operating 135 retail, wholesale and commercial sales outlets under the Unipneu banner in Quebec and the Maritimes Provinces.
Subject to certain conditions, Unimax said, the transaction was expected close May 30.
Sherwood Park, Alberta-based Tirecraft operates under the Tirecraft and President banners through 330 affiliated dealers. It maintains 48 company-owned retail/commercial stores, 22 Remington tire distribution warehouses and four Canadian Treads retreading plants for medium truck tires. All told, Tirecraft has about 800 employees and reported sales of more than $450 million (Canadian) for the year ended May 31, 2007.
Pneus Unimax said it will maintain Tirecraft's existing business model, along with the Tirecraft and President banners, the Remington Tire wholesale distribution network and the Canadian Treads retread plants. There is little overlap between the two companies, with Unimax operating solely in Quebec and the Maritimes and Tirecraft principally in provinces west of Quebec. Together, a combined Unimax-Tirecraft entity would count 465 outlets under its control from coast to coast.
Tirecraft filed for creditor protection because of a “developing liquidity crunch,” according to Cory Fries, vice president and general counsel, who said the firm did not have adequate financing in place to support its growth.
Documents filed with the Alberta Court of Queen's Bench in Edmonton, Alberta, show liabilities of $154.4 million (Can.)—including $78 million (Can.) in unsecured debt—and assets of $55.1 million (Can.).
Mr. Fries said the firm's situation developed for a “multitude of reasons,” but acknowledged one was Remington Tire's takeover in mid-2006 of President Tire Inc. In addition, the court filings noted that Michelin North America (Canada) Inc. had suspended deliveries of new tires to Tirecraft after first tightening credit terms with the dealership throughout 2006 and into early 2007. Michelin traditionally has been Tirecraft's largest supplier, accounting for about 30 percent of its sales, according to the filings.