Precision Auto Care Inc. of Leesburg, out of cash and facing deadlines on millions in debt, said yesterday that it is seeking ways out of its troubles, including an outright sale.
The company also said it will report a before-tax loss of about $5.1 million for the fourth quarter--compared with a loss of $504,000 for the same period a year ago--and a loss of $17.6 million for the year ended June 1999, compared with a loss of $3 million the year before.
The costs associated with several abandoned acquisitions could slash profits further.
Precision's stock on the Nasdaq Small-Cap Market closed yesterday at $1.81 1/4, down 6.45 percent.
Chief executive Charles Dunlap said he had negotiated an extension until Oct. 15 on $8.5 million in debt that came due yesterday and was seeking a further extension to give the company time to raise cash.
Precision has been in negotiations with several companies to possibly secure an infusion of capital or to sell all or parts of the company, Dunlap said.
The world's largest franchiser of auto care centers has been sputtering for over a year.
Last fall it laid off 10 percent of its work force and delayed debt payments. In February a board member lent the company $5 million to help avert financial disaster.
But efforts to stave off a fiscal crisis after an aggressive acquisition strategy--buying seven companies in fiscal 1998--depleted cash reserves have not been as successful as company executives hoped.
Still, Charles Dunlap said he is optimistic, adding: "We are certainly not looking at bankruptcy."
Dunlap said Precision will announce the sale of several of the acquired businesses in coming weeks.
"We're fairly close to resolving the [debt] extension," he said yesterday in a telephone interview.
"This is, I guess you would call it, the final stages of our effort to clean up and write off the issues related to the former acquisition strategies."
Precision Auto, which had 1998 revenue of $41 million, has more than 600 auto care centers, most of them franchises, including Precision Tune Auto Care, Precision Auto Wash and Precision Lube Express.
Half of the company's revenues come from franchise fees, royalties and sales at several company-owned stores; the rest come from manufacturing and distribution operations.