A major lender has canceled plans to provide working capital to Reddi Brake Supply Corp., a fast-growing Ventura-based operator of a chain of auto-parts distribution centers.
Reddi Brake says the Bank of New York Commercial Corp. terminated a commitment letter calling for the lender to replace its $7.2-million credit line with Japan's Sumitomo Bank. That arrangement is due to expire Oct. 31.
Michael J. Cassidy, Reddi Brake's chief financial officer, said he is negotiating with three other financial institutions, including CIT Group Holdings Inc. in New York, to find another credit line.
He said he's also talking with Sumitomo officials about the possibility of renewing the bank's financing.
"One way or another, I'm sure we'll be able to maintain our financing, either with Sumitomo or some other institution," he said.
Cassidy says the Bank of New York unit may have called off its credit arrangement with Reddi Brake because it didn't agree with the direction the company will be taking under its new chief executive, William M. Leider. Leider, who joined the company last June, plans to tone down Reddi Brake's expansion policy, which in the past 14 months has more than doubled its number of outlets, Cassidy said.
Reddi Brake operates a nationwide chain of stores that sells brake systems, chassis components and other auto parts primarily to professional mechanics. Since June, 1994, the company has grown from 47 to 99 units.
"I don't expect us to add any new units in the next six months," Cassidy said. "It may be another year before we expand further. We've decided it's time to digest our recent growth."
The stores are located in 30 states, mainly in the West, Southwest, Southeast, Midwest and along the Eastern seaboard. Two of the stores are in Ventura County--one in Thousand Oaks and one adjoining corporate headquarters on Walter Street in Ventura.
Cassidy said Reddi Brake now has 1,000 employees, double the number of a year ago. About 100 of the company's employees are in Ventura County, he said.
Last month, Reddi announced that--thanks to the new outlets--overall sales in June skyrocketed to $5.2 million, 94% above the same month a year ago. Same-store sales were up 13%, according to the company.
Cassidy said estimated revenue for the fiscal year ended last June 30 came to $47 million, but that earnings results weren't yet available. He declined to say whether Reddi Brake was profitable during the 12-month period.
Bruce Douglass, the firm's president and chief operating officer, recently warned that he expected disappointing earnings in fiscal 1995. He said Reddi overestimated its sales prospects in the Southeast and Midwest, and that the company probably wouldn't meet analysts' earnings projections. He added that sales in California had been hurt by this year's storms.
In fiscal 1994, Reddi lost $16.4 million, or 71 cents a share, on sales from continuing operations of $21 million. The loss included charges for issuing new shares and for the disposal of Wesco, a money-losing division.