Motorcar Parts of America, Inc. expects Fenwick Automotive Products Limited and Introcan (Fenco), will file for bankruptcy.
Fenco is currently being managed by a chief restructuring officer and a board not affiliated with Motorcar Parts of America, and Fenco will make any decision as to the timing and process for any bankruptcy proceeding.
The announcement marks the likely end of the line for what had been one of Canada’s longest-running aftermarket entities. It was acquired by Motorcar Parts in May 2011 and the resulting entities are now held as a separately capitalized subsidiaries.
“While Fenco had made progress in its transition plans for the undercar segment since the acquisition, the cost savings and operational efficiencies were not sufficient for Motorcar Parts to continue its involvement with Fenco under the current financial structure. Motorcar Parts of America has written off its investment in Fenco, which will be disclosed in the company’s fiscal 2013 year-end results. The separation of the control of Fenco from us will result in the deconsolidation of Fenco from our financial statements,” said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.
He emphasized that Motorcar Parts of America’s rotating electrical base business continues to be strong. “We expect to report record sales of approximately $213 million for rotating electrical when the company files its fiscal 2013 year-end results this month,” Joffe said. He noted that the company’s liquidity remains strong. Motorcar Parts of America expects to report a cash position of approximately $19.0 million, and approximately $18.0 million available under the company’s revolving credit facility at March 31, 2013. He added that the company will realize tax benefits as a result of the losses incurred through Fenco. These benefits will be realized in stages, based on the availability of refunds from past taxable periods and reductions in tax payments on future earnings.