Boyds Wheels Seeks Protection From Creditors

By JAMES S. GRANELLI

Jan. 31, 1998 12 AM PT

TIMES STAFF WRITER

SANTA ANA —

Financially troubled Boyds Wheels Inc., overextended and pressed by falling sales, filed a bankruptcy petition Friday to seek protection from creditors while it continues to reorganize its operations and debts.

The Stanton custom auto parts maker still has $12 million more in equipment and other assets than it has in debts, according to the petition.

But that cushion was eroding as shrinking revenue made it difficult for the company to meet its obligations. Boyds was in default, for instance, on a $7.9-million loan owed to City National Bank, its biggest creditor.

“The company overexpanded its manufacturing capability, spent most of its available cash on hard assets [such as equipment] and never developed a business sales plan to support all that overhead,” said David M. Asher, who was brought in as president in June.

The company went public in 1995 and remained profitable through 1996. But an expensive growth effort coincided with a slump in the market for its custom wheels and accessories.

The company announced the bankruptcy petition after the stock market closed. Its shares lost 13 cents, closing at $1.75 a share in Nasdaq trading.

Boyds’ bankruptcy lawyer, Jeffrey Golden, said he will seek routine court orders Monday to allow management to continue operating the company. He said Boyds soon will file a reorganization plan, which creditors must approve to allow the company to emerge from bankruptcy.

Golden said the company wasn’t pushed into bankruptcy and has plenty of net worth--the difference between about $26 million in assets and $14 million in debts.

Asher said Boyds customers have reassured the company that they will continue ordering parts.

The company was started a decade ago by Boyd Coddington to make high-quality aluminum wheels for his custom hot rods. Demand for the wheels grew rapidly and soon brought in more money than the hot-rod shop.

In recent years, Coddington expanded his product lineup with motorcycle wheels and accessories, car-themed clothing and a line of car waxes and polishes.

As the market slumped, Boyds was hit with an equipment problem that forced it to scrap tens of thousands of dollars’ worth of material and delay deliveries to customers.

Boyds’ block-long series of buildings contains everything from foundry and casting capabilities to polishing and assembly operations. But that kind of business is too expensive for a company that generated only $16 million in sales last year, Asher said. That represents a 40% drop from the company’s revenue high of $27.9 million in 1996.

Asher said numerous steps have been taken since his arrival to revive Boyds. The company sublet or got out of leases on three buildings, eliminated the motorcycle accessory line, folded the motorcycle wheel line in with the auto wheel line and reduced the number of wheel products about 30%.

The company also installed a new operations management team, as well as some new executives. Coddington resigned in November as chairman and chief executive.

As a result of the changes, the work force fell from a high of 350 to 192.

Asher said he is confident that Boyds Wheels will survive and grow again, though more slowly.

“We are still the trendsetter, creating new designs that everyone tends to follow,” Asher said. “All our creative people are here, and our management team has pledged to see this thing through.”

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Boyds Wheels at a Glance

Founded: 1988 by Boyd Coddington

Headquarters: Stanton

Chief Executive: Gardiner S. Dutton

Products: Designs and manufactures aluminum wheels and related products for automobiles and motorcycles

Status: PublicExchange: Nasdaq

Sales (in millions)

1997 3rd qtr. $4.8

Net Income (in millions)

1997 3rd qtr. $ --2.1

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