GPX blames bankruptcy on antidumping duties
GPX International Tire is blaming its decision to file Chapter 11 on a 2007 U.S. Department of Commerce Antidumping/Countervailing Duty inquiry that resulted in "crippling (44%) duties levied" against the firm's Starbright factory in China.
Alliance Tire recently announced that it plans to purchase GPX International's assets in a transaction that should be finalized by the end of the year. (For more information, see Alliance Tire to acquire GPX International's assets on www.moderntiredealer.com.)
"The high levels of duties set by (the Department of Commerce) in September 2008 had a devastating and irreversible financial impact on the Starbright manufacturing facility and on GPX as a whole," according to GPX officials.
In late 2007, the Department of Commerce made the determination that Chinese OTR tire manufacturers receive subsidies from the Chinese government ranging from slightly more than 2% to around 6.5%, which led to duties that were later levied.
The bankruptcy filing only affects GPX's U.S. business. The company's foreign subsidiaries -- Dynamic Tire Corp., GPX Tyre South Africa, Starbright Group Inc., Hebei Starbright Tire Co. Ltd. and EastStar Gloabl Tianjin -- are not filing bankruptcy "and will continue to operate in the normal course." However, GPX will "wind down" its operations in Europe.
"During Chapter 11 proceedings, GPX will continue to manufacture and distribute tires and service to its value customers." However, during reorganization, GPX -- in addition to selling its U.S. assets to Alliance -- will seek to sell two other units:
* its solid tire division, which includes manufacturing plants in Red Lion, Pa.; Gorham, Maine; and Hebei, China.
* its Canadian subsidiary, Dynamic Tire Corp., which will become "a separate entity engaged in the sale and distribution in Canada or Galaxy and Primex brand OTR tires, the sale and distribution of medium radial truck and passenger car tires, and private label sourcing."
Plans are for Dynamic Tire to be purchased by a management buy-out team consisting of Robert Sherkin and Peter Koszo. "Once the Dynamic sale has been approved by the courts, Dynamic intends to continue to market the Galaxy, Primex, other GPX/Dynamic brands and medium radial truck tires in Canada."