Cardis Corp. to Sell 40% of Tuneup Masters to Public
Cardis Corp. is selling about 40% of Tuneup Masters to the public in a stock offering, primarily to raise money to pay a debt taken on when it bought the Woodland Hills-based chain of tuneup garages last summer.
According to a preliminary prospectus filed with the Securities and Exchange Commission, 2 million Tuneup Masters shares are to be offered at $12 to $15 a share, which would raise from $24 million to $30 million. Up to $4.5 million more could be raised if the underwriters of the stock offering exercise an option to sell an additional 300,000 shares for Cardis.
The proceeds from the stock sale, the prospectus said, are to be used mostly to help pay off some of $43.5 million Cardis borrowed from Dresdner Bank AG, a West German banking concern. Cardis, an automobile parts distributor based in Beverly Hills, is to receive $3.5 million of the proceeds as a dividend, it said.
$53.4 Million Acquisition
Cardis completed its acquisition of Tuneup Masters in September in a cash and stock deal valued then at up to $53.4 million. Tuneup Masters was bought from racing executive Andy Granatelli, who owned 82.7% of the company, and partner Jerry Dres, who owned 17.3%.
Tuneup Masters, now a subsidiary of Cardis, is offering 1.5 million of the shares, while Cardis is selling 500,000 of them. After the offering, Cardis will own 61.9% of Tuneup Masters, but that would be lowered to 56.2% if the underwriters exercise the option to sell the 300,000 additional shares.
The prospectus provides a rare glimpse at Tuneup Masters’ finances, which previously were guarded closely by Granatelli, who refused even to disclose the number of shops the company operated.
In the nine months ended June. 30, the company’s net earnings rose 123% to $3.3 million, or 87 cents a share, from $1.5 million in the year-earlier period. The company said the big earnings increase was due largely to sales of additional parts, which in turn increased its profit margins.
Revenue for the year ended Sept. 30 rose 11.6% to $52.0 million.
Cardis said it has not determined Tuneup Masters’ net earnings for the year because it is still determining the company’s tax liabilities. Before taxes, Tuneup Masters earned $8.1 million in the fiscal year, nearly double the $4.1 million it earned a year earlier.
The prospectus said the company operates 230 company-owned garages in California, Nevada, Utah, Arizona, New Mexico, Texas, Oklahoma and Louisiana. They feature tuneups for $45.95 to $49.95, and smog inspections, oil changes and other maintenance jobs.
Granatelli, 63, who remains chief executive of Tuneup Masters and is now Cardis’ largest stockholder with a 18.6% stake, is a long-time racing driver and owner of race cars, including the one Mario Andretti drove to victory in the 1969 Indianapolis 500.
According to the prospectus, Granatelli received $1.38 million in cash compensation from Tuneup Masters in the year ended Sept. 30, which was paid to his family-owned corporation.
The prospectus said Granatelli and his wife, Dolly, now have employment agreements with the company through Dec. 31, 1991, that will pay them a combined $360,000 a year to start. They also will make radio and television commercials for the company at six times union scale, the prospectus said.
Prudential-Bache Securities is the managing underwriter of the offering.
TUNEUP MASTERS AT A GLANCE Tuneup Masters, a Woodland Hills chain of tuneup garages bought by Cardis Corp. of Beverly Hills in September, is planning a public stock offering. The company employs 1,043 people and operates 230 company-owned garages in eight sites.
Revenue 1986 $52.0 million 1985 46.6 million 1984 41.1 million 1983 41.5 million 1982 38.4 million
Net income 1986* $3.3 million 1985 2.1 million 1984 0.42 million 1983 2.0 million 1982 1.8 million
* 9 months ended June 30
