GPX International Tire Corporation Announces Chapter 11 Restructuring
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MALDEN, Mass.--(BUSINESS WIRE)-- GPX International Tire Corporation (GPX) announced today that it has filed for reorganization under Chapter 11 of the United States Bankruptcy Code. The court filing will only affect GPX and not its foreign subsidiaries. Dynamic Tire Corp.; GPX Tyre South Africa (Pty.); Starbright Group, Inc.; Hebei Starbright Tire Co., Ltd.; and EastStar Global Tianjin, Inc. are not filing bankruptcy and will continue to operate in the normal course. The purpose of the reorganization is to separate the Company's operations into three distinct businesses in order to facilitate the sales of those businesses in transactions which will allow 95 percent of the Company's current North American workforce to remain employed. Some job eliminations may arise from redundancies in corporate functions. As a result of the reorganization, the Company will wind down its European operations. During the Chapter 11 proceedings, GPX will continue to manufacture and distribute tires and service its valued customers. The strategic buyers identified by the Company are established entities in the global tire industry. The Company expects to complete the sales by December 31, 2009, pending approval by the bankruptcy court. During the reorganization, GPX intends to seek court approval to sell the company's businesses in three transactions:
-- Alliance Tire Corporation will acquire GPX's U.S. operations, including
its assets, customer relationships, warehouse footprint, worldwide
rights to the Galaxyand Primexbrands, the Company's medium radial truck
tire distribution business and the Company's South African entity, GPX
Tyre South Africa (Pty.). Alliance is a global leader specializing in
the development, manufacture and sale of highly engineered agricultural,
forestry, construction and earthmover tires worldwide. Alliance
manufactures in Israel and has recently completed a state of the art
factory in India. Alliance will continue to market Galaxy, Primex, other
GPX brands, and medium radial truck tires to GPX's customer base. GPX
customers will benefit from the complementary strengths of the Alliance
and GPX product lines, particularly in the agricultural and construction
tire segments. Alliance will continue to source products from GPX's
valued network of manufacturers in China and elsewhere. The combination
of the Alliance and GPX manufacturing resources provides Alliance with a
large, diverse, and highly flexible global sourcing platform that is
capable of providing competitive products in all segments of the
off-the-road tire industry in North America and throughout the world.
-- Dynamic Tire Corp., the company's Canadian subsidiary, will become a
separate entity engaged in the sale and distribution in Canada of
Galaxyand Primexbrand off-the-road tires, the sale and distribution of
medium radial truck and passenger car tires, and private label sourcing.
It will be acquired by a management buyout team led by Robert Sherkin
and Peter Koszo. Once the Dynamic sale has been approved by the courts,
Dynamic intends to continue to market Galaxy, Primex, other GPX/Dynamic
brands, and medium radial truck tires in Canada. Dynamic will continue
to operate this business, purchase tires from longstanding suppliers and
provide customers with a high level of customer service as it has done
in the past.
-- The Company also intends to pursue the sale of its Solid Tire business
as well as its Gorham, ME; Red Lion, PA; and Hebei, China manufacturing
facilities subject to approval by the bankruptcy court. GPX intends to
continue to operate this business unit pending its sale. The Company is
actively working with a potential buyer for this business and expects to
have definitive agreements in place prior to closure of the other sales.
The Chapter 11 filing comes after a Department of Commerce (Commerce) Antidumping/Countervailing Duty (AD/CVD) inquiry commenced in June 2007 that resulted in crippling (44%) duties levied against GPX's Starbright facility while leaving all other major Chinese off-the-road tire manufacturers with nominal or manageable duties. After vigorously responding to Commerce's inquiry and filing an appeal of the final duties, the U.S. Court of International Trade ruled on September 18, 2009, that Commerce's application of its AD/CVD methodologies in calculating Starbright's duties was "unreasonable" and therefore "unlawful." Furthermore, the Court ruled that Commerce's decision "was arbitrary and capricious and unsupported by substantial evidence." Even though the U.S. Court of International Trade ruled in favor of GPX on appeal, the high level of duties set by Commerce in September 2008 had a devastating and irreversible financial impact on the Starbright manufacturing facility and on GPX as a whole. Accordingly, GPX does not have the ability to wait for a final decision on the duties before completing the sale process.
"The U.S. government's decision to impose extraordinarily punitive AD/CVD duties on GPX's Starbright manufacturing facility in China has prompted the difficult decision to sell GPX's business to third parties," said Craig Steinke, President and CEO of GPX. "The buyers we have identified are well established in the global tire industry and are positioned to further invest in these brands, grow the business and provide exceptional service to our customer base. The Company's longstanding tradition of innovation through research and development, superior level of service, and product quality will continue with these new owners. We feel very confident that this will be a positive and smooth transition for our employees, customers and suppliers." Management expects these transactions to be finalized before the end of 2009.
GPX is represented in U.S. Bankruptcy Court by attorneys Harry Murphy of Hanify & King, P.C. and Peggy Farrell of Hinckley Allen & Snyder LLP as corporate counsel. TM Capital Corp. serves as investment banker to GPX in connection with these transactions and Argus Management Corporation serves as restructuring advisor to GPX.
About GPX International Tire Corporation
GPX International Tire Corporation is one of the largest independent global providers of specialty "off-the-road" tires for the agricultural, construction, materials handling and transportation industries. GPX is a worldwide company, headquartered in Malden, Massachusetts, with operations in North America,China, Canada, and Germany. A third generation family-owned business, GPX and its predecessor companies have been in business since 1922.
Source: GPX International Tire Corporation
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