Over the Counter: July 2004

Dana Aftermarket Sale Prospects Brighten

While firm details are hard to come by, Dana Corporation may have a buyer for its aftermarket business.

Reports from a variety of media outlets, including aftermarket newsletter Automotive Week, say the lead bidder for the company’s aftermarket business is the Cypress Group of New York. The investment group is believed to be offering the equivalent of more than $1.3 billion CDN for the business. The Dana aftermarket business supplies products under a variety of brand names, including Raybestos brakes, Spicer chassis parts and Wix brand filters.

Cypress gained a lot of attention for its stake in the Cinemark movie theatre chain, which it sold earlier this year when Cinemark was merged with another buyout group, Madison Dearborn Partners.

Coming in a close second, according to a Reuters report on the Dana sale, is the Carlyle Group of Washington, D.C. Carlyle acquired the Wells Manufacturing, Champion Labs, Pioneer Inc., Airtex Products and Neapco subsidiaries from UIS Inc. last year and later renamed them United Components Inc.

If Carlyle were to have the winning bid for the Dana business, it would have control over some substantial aftermarket businesses. And, it would further its presence in the automotive industry at large, seeing that the firm has acquired Breed Technologies (a safety products specialist notable for its airbag products) and the German sunroof maker Edscha.

Carlyle was involved in negotiations to purchase the automotive business of TRW prior to the Blackstone private equity group closing the deal on its own.

Other rumoured suitors named by Automotive Week include Bain Capital, Blackstone, Heartland Industrial Partners and the Texas Pacific Group (TPG).

Heartland in 2000 acquired a controlling equity stake in Metaldyne, formerly MascoTech Inc. and Simpson Industries. Two of Heartland’s other current investments are TriMas Corp. (a manufacturer of such items as tools, trailers and roof racks) and Collins & Aikman (an automotive interior components company).

Former MPA CFO Sentenced for Role in Financial Fraud

Peter Bromberg, former chief financial officer of Motorcar Parts & Accessories Inc., now known as Motorcar Parts of America, was sentenced to five months in prison and five months of home detention for his role in a financial fraud, according to the Securities and Exchange Commission and the U.S. Attorney’s Office for the Central District of California.

From 1994 until his resignation in May 1999, Bromberg was the CFO of the Torrance, California-based remanufacturer of starters and alternators.

In September 2002, the U.S. Attorney’s Office charged that Bromberg knowingly made false and misleading statements about Motorcar’s financial condition and performance in its 1997 and 1998 annual reports. Bromberg pled guilty to these charges.

That same month, the SEC settled civil fraud charges against Motorcar and Bromberg. The commission had alleged that the company overstated pre-tax earnings for fiscal year 1997 by nearly $3.4 million (59.8 percent) and for fiscal year 1998 by $3.6 million (49.6 percent). All figures in U.S. dollars.

Both Bromberg and Motorcar settled those charges without admitting or denying the commission’s allegations. Bromberg agreed to pay $76,275 U.S. in disgorgement plus prejudgment interest. The SEC, however, waived all but $50,000 of that amount and did not order a civil penalty, based on his sworn representations in his statement of financial condition and other documents submitted to the commission.

In December 2003, the SEC and the U.S. Attorney’s Office brought actions against Richard Marks, Motorcar’s former president and chief operating officer. He agreed to plead guilty to the criminal charges and will be sentenced on August 9.

In settling the SEC’s civil fraud action, Marks paid over $1.2 million and was permanently barred from serving as an officer or director of a public company.

Right To Repair Takes Step Forward

The independent automotive aftermarket got one step closer to better access to vehicle repair information with the commitment of the 100th U.S. congressman to sponsor the Motor Vehicle Owners’ Right to Repair Act.

“This is an important and exciting milestone in the battle to enact this legislation so critical to the future competitiveness of the independent aftermarket,” said Kathleen Schmatz, AAIA president and CEO. “We must guarantee that independents have full access to the information and tools necessary to compete with the new car dealers.”

While the battle is being fought in the U.S., the Canadian aftermarket expects that improved access south of the border will have a similar impact in Canada.

Autotecnica Selects Western Rep Agency

Autotecnica, a leader in performance and styling products, has selected SS Sales & Marketing as a manufacturer’s rep agency providing coverage for Autotecnica in 10 western states and Western Canada.

Autotecnica offers OEM-quality styling accessories for many of today’s most popular vehicles, including chrome exterior and interior dress-up accessories, shift knobs, racing pedals and more, under such popular brand names as EVO, TypeR, Targa, Carex Sports, Monza and Niken. Autotecnica focuses on providing customer service, while strongly supporting traditional automotive aftermarket distribution channels.

Cliplight Achieves Quality Certifications

Cliplight Manufacturing Company, manufacturer and distributor of automotive aftermarket/ industrial HVAC/R products worldwide, has received its Certificate of Registration for ISO 9001:2000. This certification endorses its commitment to continuous improvement when developing and supplying innovative, quality, and unique products.

Cliplight products include lighting, UV leak detection, mobile A/C, and residential and industrial HVACR service products. Cliplight also specializes in the manufacturing of OEM battery chargers for the medical, leisure, and other motive power industries. Cliplight Manufacturing is now celebrating over 28 years in business.

Kitchener Service Dealer Drives Corvette Away

Tina Miller, a professional service dealer from Kitchener, Ont., has won the grand prize in the Carquest Race for the Race Sweepstakes, a 2004 Chevrolet Corvette Z06.

Miller was one of 15 first place winners from across North America who earned a chance at winning the Corvette.

The Race for the Race Sweepstakes was a promotion held from August to December 2003, offering seven special assortments from the manufacturers of Carquest brakes, forward lighting, filters, engine controls, wiper blades, oxygen sensors, and transmission filter kits. Each of the 15 winners completed and returned entry forms and was lucky enough to have his or her name drawn from thousands of entries.

Each of the 15 finalists for the Corvette won a trip for two to the Carquest Auto Parts 300 NASCAR Busch Series race and the Coca-Cola 600 NASCAR Nextel Cup race at Lowe’s Motor Speedway in Charlotte, N.C., during the U.S. Memorial Day weekend at the end of May.

Finalists were paired with a driver who qualified in the top 15 positions for the Carquest 300. The finalist with the driver who had the best finish in the race would win the Corvette. Miller was lucky enough to be paired with race winner Kyle Busch. She took delivery of her new car following the race at a special ceremony at Hendrick Motorsports.

Scholarships Awarded to 145 Students

The Global Automotive Aftermarket Symposium (GAAS) continues its work to ensure a strong future talent pool for automotive aftermarket companies and service outlets, awarding 145 scholarships, including 17 to Canadian students.

The selected students will receive $1,000 GAAS scholarships in 2004, with the majority of recipients entering automotive vocational-technical programs, which will help address the critical shortage of automotive technicians.

In the eight years of the scholarship, 901 students have received aid totalling approximately $920,000.

“The sheer number of scholarships the program has awarded is imp
ressive, but what is even more impressive is the fact that 75 percent of past recipients now have careers in the automotive aftermarket,” said Peter Kornafel, chairman of the GAAS Scholarship Selection Committee. “These numbers demonstrate the importance of the program and are evidence why the industry is strongly encouraged to contribute even greater resources toward the program. Assuring our future begins today.”

The annual investment to help develop future aftermarket industry leaders is primarily funded through proceeds from the annual Global Automotive Aftermarket Symposium. This two-day program brings together numerous industry executives and examines the issues and trends affecting the automotive aftermarket industry and influencing its future. GAAS has become the aftermarket’s premier educational conference.

The 2005 event is set for Wednesday and Thursday, May 11-12, at the Hyatt Regency O’Hare, Chicago, Ill. Details are at www.globalsymposium.org.

The scholarships are available to students in two-year technical college programs and vocational schools and four-year college programs. To be eligible for a GAAS scholarship, applicants must be enrolled full-time in a college-level program or a NATEF (National Automotive Technician Education Foundation) accredited automotive technical program. Graduate programs and part-time undergraduate programs do not qualify.

An application for Canadian students is available from the Automotive Industries Association (AIA) of Canada at 613-728-5821, or at the organization’s Web site: www.aiacanada.com. Deadline for 2005 scholarship applications is Thursday, March 31, 2005.