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Cardis Corp. to Sell Tuneup Master Chain in $78.2-Million Deal

October 26, 1987|From Associated Press

Cardis Corp., mired in financial problems after three years of rapid expansion, said Monday that it has agreed to sell the Tuneup Master auto-repair chain it purchased last year.

Cardis, one of the nation's largest distributors of auto parts, said it will receive $78.2 million in cash for Tuneup Master, with 350 shops from California to Louisiana.

In addition, the buyers, identified only as a group of private investors, will assume $4 million in debt still owed to the previous owners. Until Cardis bought it, Tuneup Master was still 85% owned by its founder, former race car driver Andy Granatelli.

Cardis said it expects to show a profit of about $33 million on the deal. It said it will use the money to reduce its corporate debt and provide working capital. That profit will be sheltered by the company's tax-loss carryforwards, Cardis said.

For the 18 months ended July 31, Cardis has lost $35.5 million, including $19.9 million in interest payments and a $1.2 million deficit from discontinued operations.

In July, cash-strapped Cardis said it had failed to make $1.6 million in interest payments and failed to pay off a $3 million note when it was due. It asked holders of $25 million in notes to defer interest payments on that debt until 1988 to give it time to restructure.

Beverly Hills-based Cardis said Monday that it is still in negotiations with its creditors and investment bankers on a comprehensive restructuring plan.

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