Turnaround specialist Jerry Goldress has been hired as chairman and chief executive officer of Cardis Corp., replacing A. Michael Victory, who resigned after less than three months at the financially distressed auto parts distribution firm.
Victory, the company's second-largest stockholder, and his predecessor, Jack I. Salzberg, also resigned their seats on the company's board, the firm said Tuesday.
The management shake-up was announced only hours after Cardis reported a loss of $4.9 million for its fiscal 1988 second quarter, which ended Oct. 31.
The Buena Park company lost $46.3 million during the two years ended Oct. 31 and reported more than $100 million in debts as of that date. To raise money for past-due loan payments, Cardis has tried to sell its profitable Tuneup Masters subsidiary, but negotiations have reportedly stalled.
Victory, a New York investment banker who holds 150,370 of the company's 5.8 million shares, was able to restructure loan payments to Security Pacific National Bank, the company's largest creditor, during his brief tenure as chief executive.
The revised payment plan called for Cardis to pay off $20 million of its $34-million debt to Security Pacific on Feb. 28. It could not be determined Tuesday if the payment was made. Victory could not be reached for comment.
So far, however, the company has been unable to reverse its losses. Cardis spokesman David Olson said the company expects to report a loss for its fiscal third quarter.
Goldress, 56, is a specialist at rescuing troubled firms and has been a consultant to Cardis since last spring. He is president of Grisanti, Galef & Goldress, an Encino management consulting firm, and he claims a 90% success rate at turning around 35 mid-size companies, according to Business Week magazine.
Goldress said in a prepared statement that he will focus on selling certain Cardis assets and restructuring the company's debt even more.
Tuneup Masters Sale
Cardis announced in October that it had signed an agreement to sell its Tuneup Masters subsidiary for about $80 million to a New York investment group. But the company has been unable to complete the sale. Tuneup Masters is a Woodland Hills firm that operates 232 quick-fix auto repair shops in eight Western and Southwestern states.
Tuneup Masters Chairman Andy Granatelli is Cardis' largest stockholder, with 960,000 shares. He could not be reached for comment.
Cardis stock closed Monday at $1.125 per share on the American Stock Exchange. It was not traded Tuesday.
Cardis reported a net loss of $4.9 million for its fiscal 1988 second quarter, compared to a loss of $14.9 million for the year-earlier period. Sales for the quarter were $54.8 million, down 16% from $65.2 million.
For the first six months of the year, the company had a net loss of $10.8 million, compared to $16.1 million in the period a year earlier. Revenues for the first half of the year were $114 million, down 8% from $124 million.