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
Galaxy and Primex brands, 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 Galaxy and Primex brand
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.
Media Contact:
O`Neill and Associates
Ann Murphy
617-646-1031
617-515-4060
amurphy@oneillandassoc.com
Copyright Business Wire 2009
