Chain Agrees to Buy Slemons Imports

Fletcher Jones Management Group has agreed to pay $11.5 million in cash and notes to acquire the assets and franchise of bankrupt Jim Slemons Imports, one of the nation’s largest Mercedes-Benz dealers.

The deal has been approved by Slemons Imports’ largest secured creditor, Tokai Credit Corp., and by Mercedes-Benz of North America. But it still must get the blessing of a federal bankruptcy judge.

Slemons Imports, which reported revenue of $110.2 million last year, including $61.3 million from sales of new Mercedes-Benzes, cited sluggish sales and excessive losses from outside investments when it filed in August for protection from creditors under Chapter 11 of the federal bankruptcy code.

Malcolm McCassey, general manager for Slemons, said the deal will provide enough money to pay off Tokai but contains no plan for repaying about $1.5 million to unsecured creditors.

The unsecured creditors committee--made up of representatives of parts and equipment suppliers who are still owed money--was told of the proposed deal Tuesday morning.

The dealership is waiting for the unsecured creditors to propose a payment plan, McCassey said.

The deal with Fletcher Jones--one of the nation’s largest auto chains, with 11 dealerships in Whittier, Buena Park, Las Vegas and Reno--calls for the Las Vegas, Nev.-based company to pay $2.5 million cash and sign a 10-year, $9-million promissory note.

McCassey said $1 million of the cash would be used to pay local, state and federal taxes, and $1.5 million would be paid to Tokai Credit.

If the deal is approved by the bankruptcy court, Fletcher Jones Management would establish a new Mercedes-Benz dealership on the same property, operating as Fletcher Jones Motor Cars. All of the existing Slemons Imports staff would transfer to the Jones Motor Cars organization, McCassey said.

Slemons and Jones were unavailable for comment Tuesday.