LEAVITTSBURG, Ohio—Denman Tire Corp., marking its 90th year in business, is struggling to remain viable after being buffeted on several fronts.
The company has learned that its primary lender, CIT Group Inc., is teetering on the verge of bankruptcy.
Compounded with that, Denman's request in early 2009 for a U.S. government multimillion dollar loan in an effort to drum up business went unanswered.
The producer of off-highway, agricultural and commercial tires is now looking at major alternatives. Denman recently hired Mesirow Financial Inc., based in Chicago, to explore various alternatives for the Ohio tire maker.
Denman is evaluating its options, according to Michael Simon, who's heading up the project for Mesirow.
He would not comment on a possible sale or any other possibilities, stating only that “we have been retained to study alternatives for the business.”
Sanford Pensler, who heads up Pensler Capital Corp., the Princeton, N.J.-based owner of Denman and several other companies, said that “Mesirow is looking at all strategic options” for Denman and “they'll be coming back to us” with their recommendations.
He would not comment further about whether one of those options is the possible sale of Denman, but when asked about potential suitors for the company, he acknowledged: “We've been approached by a bunch, a variety of companies.”
At least one official of a tire marketing firm, who asked that his name not be used, acknowledged that his company received a full in-depth report on Denman from Mesirow outlining the tire maker's key investment considerations.
“It could be a darn good company if it's properly run,” he said.
Compounding Denman's problems is an impending crisis with CIT Group. One of the nation's largest commercial lenders, CIT was the recipient of a $2.33 billion taxpayer-financed bailout in December.
Shares of the century-old company plummeted July 16 after its survival was thrown into doubt as federal officials refused to offer a second bailout, according to news reports.
A July 16 report in the New York Times said “unless a buyer emerges for CIT—a prospect that seems unlikely,” the lender could founder.
Pensler said he doesn't “know how all that's going to play out. I guess we'd have to find another primary lender if CIT goes bankrupt. I assume they'll continue to lend even in bankruptcy, but we just don't know.”
The last two years have been weak for Denman, which has been struggling since the latter part of 2008 when business hit a serious slide.
In 2007, employees took concessions, including a freeze in pensions and a reduction in retiree health care benefits. The firm laid off about 85 workers in the latter part of 2008, and now has about 190 hourly employees, Pensler said earlier this year.
The off-the-road tire manufacturer had substantial losses from October 2008 through February, and in April Pensler Capital said Denman needed a $3 million loan or additional government contracts to survive the ongoing economic recession and remain afloat this year.
At the time of the bailout request, Pensler said that money would allow the firm to inject capital into its Leavittsburg plant, buy new equipment and provide a broader range of products.
Mike McNulty, Rubber & Plastics News staff, contributed to this report.