Cardis Corp., the bankrupt Buena Park auto parts distributor, has tentatively agreed to sell its profitable Tuneup Masters subsidiary to a New York firm for more than $60 million, the firm said Monday.
The agreement, however, faces the formidable task of getting approvals from the U.S. Bankruptcy Court, two major bank creditors and a committee of unsecured creditors, Cardis President James E. Lane said.
The sale of 30-year-old Tuneup Masters to Bessemer Securities Corp. is part of a “slimming down” that will return Cardis to its basic business of providing auto parts to retailers, repair shops and fleet companies, Lane said.
The restructuring should help the 5-year-old company reorganize its debts and emerge from Chapter 11 proceedings as a viable company early next year, Lane said.
The restructuring also involves the imminent sale of its New Apollo warehouse in Carson. A plan to sell the warehouse to a group of investors for $8.3 million fell apart after the bankruptcy petition was filed, Lane said. An agreement for less money has been reached with a new buyer, but Lane would not disclose the amount. The deal must be approved by the court and creditors.
Cardis also is leaving the Arizona market and selling its four warehouses there. And it recently closed and consolidated eight warehouses in California, leaving it with nine warehouses in the state and 30 company-owned stores, mostly in San Diego, Lane said.
The sale of Tuneup Masters would make Andy Granatelli happy.
Granatelli, chairman of Tuneup Masters and the largest single shareholder in Cardis, said Monday that the sale would be “good for the shareholders and for the employees of Tuneup Masters,” a Newbury Park-based, quick-fix automobile service chain with 232 outlets.
Cardis and Granatelli declined to reveal results for Tuneup Masters except to say that it is Cardis Corp.'s only profitable unit.
Granatelli said he owned about 83% of Tuneup Masters when he engineered its sale to Cardis two years ago in a cash-and-stock deal valued at $53.4 million.
The deal left Granatelli with a 16.7% stake in Cardis, but he disavows any responsibility for the financial problems at Cardis and its three other subsidiaries, which also sought bankruptcy protection.
Cardis lost $54 million in a little more than two years before it filed for bankruptcy in May. Analysts blamed the slide on overambitious expansion plans.
Granatelli said he has until Nov. 30 to arrange his own deal with Bessemer to stay with Tuneup Masters. But he said it would be premature to say what position or what interest he may have if the deal is approved.
Bessemer is affiliated with the Bessemer Trust, both of which are investment vehicles primarily for the Phipps family, which made its fortune in steel.
One of the obstacles to completing the deal, Lane said, is a bankruptcy court hearing that would allow other potential buyers to bid for Tuneup Masters. He said he does not know of other potential buyers.
One approval that appears likely, Lane acknowledged, would come from the Dresdner Bank of West Germany, which is owed $43.5 million plus interest for the loan it made to Cardis to buy Tuneup Masters. Dresdner, a secured creditor with Cardis stock as collateral, would be repaid completely.
The rest of the proceeds, Lane said, would go to Security Pacific National Bank, another secured creditor that is owed $72.8 million.