Alliance Tire Buys GPX Assets
Just a day after GPX International Tire Corporation (GPX) filed Chapter 11 bankruptcy protection, Israel-based Alliance Tire Group announced it has signed an agreement to purchase certain assets for a reported $38.3 million. According to Alliance, the deal includes: “GPX’s US operations, customer relationships, warehouse footprint, worldwide rights to the Galaxy and Primex brands, the company’s medium radial truck tyre distribution business and the Company’s South African entity, GPX Tyre South Africa (Pty.).”
According to GPX the purpose of entering chapter 11 was “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 per cent of the company’s current North American workforce to remain employed.” Crucially, the statement points out that “the company will wind down its European operations.” GPX also explained that it has buyers lined to purchase various parts of the business.
Alliance’s statement on its purchase said the company will continue to market Galaxy, Primex, other GPX brands, and medium radial truck tyres to GPX’s customer base. The company says it will also continue to source products from GPX’s “valued network of manufacturers in China and elsewhere.” Alliance expects to complete the transaction by 31 December 2009, pending approval by the bankruptcy court.
Alliance manufactures in Israel and has recently completed construction of a new factory in India. The Alliance Group is owned by the Indian Mahansaria family, with the financial backing of Warburg Pincus.
GPX’s Foreign Subsidiaries Didn’t File Chapter 11
A later statement issued by GPX revealed more about GPX’s constituent parts and the collapse of the company that was formed when Canada’s Dynamic Tire Corp. and Galaxy Tire & Wheel Inc merged in June 2005.
It appears that when GPX International Tire Corporation announced it had filed Chapter 11 on 26 October the filing did not affect GPX’s 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.
Dynamic Tire Corp., the GPX’s Canadian subsidiary, will become a separate entity engaged in the sale and distribution in Canada of Galaxy and Primex brand OTR tyres, the sale and distribution of medium radial truck and passenger car tyres, 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 tyres 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.
GPX also reportedly intends to pursue the sale of its Hebei, China, manufacturing facilities as well as its Gorham, Maine; Red Lion, Pennsylvania operations 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.
GPX blames “crippling duties”
The chapter 11 filing comes after a US Department of Commerce antidumping/countervailing duty inquiry commenced in June 2007, resulting in what GPX called “crippling (44 per cent) duties levied against [the] Starbright facility while leaving all other major Chinese OTR tyre manufacturers with nominal or manageable duties.” After vigorously responding to the inquiry and filing an appeal of the final duties, the US Court of International Trade ruled on 18 September 2009, that the application of its AD/CVD methodologies in calculating Starbright’s duties was “unreasonable” and therefore “unlawful.”