Motorcar Parts Breaks Off Failed AcquisitionMonday, June 10, 2013
Motorcar Parts of America Inc. on Monday said the company it bought two years ago will be broken off and would then likely file for bankruptcy protection.
The Torrance remanufacturer of alternators and starters said that it has written off its investment in Toronto-based Fenwick, which was acquired for $5 million in stock in May 2011.
Fenco is now managed by a chief restructuring officer and a board not affiliated with Motorcar Parts, according to a company press release. The timing of the bankruptcy filings will be determined by Fenco.
Motorcar Parts has struggled to integrate the operations of Fenwick, which operates under the Fenco brand and makes brake components, axles and other “under-the-car” parts. As Motorcar Parts divisions, they go by the names Fenwick Automotive Products Ltd. unit in Canada and Introcan Inc. in the United States.
Fenco contributed a $6.9 million operating loss to Motorcar Part’s fiscal third quarter this year, dragging down the company’s results.
"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," Selwyn Joffe, Motorcar’s chief executive, said in a statement.
Motorcar Parts plans to disclose the financial impact of its failed investment when it reports financials for its fiscal 2013, which ends June 30.
Shares closed up 77 cents, or 11 percent, to $7.46 on the Nasdaq.