Brodie’s sold Lex Brodie's Tire Co., a household name in Hawaii for nearly half a century, has been foreclosed on and sold to a subsidiary of Finova Group Inc., a commercial finance company based in Arizona, records show.
to lender
The tire company was purchased
from foreclosure last monthBy Tim Ruel
truel@starbulletin.comA statement announcing the sale was being prepared yesterday and is expected to be released this morning, according to a person familiar with the situation. John Mayo, a Tennessee businessman who bought Lex Brodie's from its local namesake in 1991, could not be reached for comment yesterday.
The foreclosure sale was completed April 23, and includes Lex Brodie's four Oahu locations on Queen Street, Kalihi Street, Farrington Highway in Waipahu and Kamehameha Highway in Pearlridge. Two of the stores, Queen Street and Waipahu, have gas stations.
A Finova spokeswoman said the firm previously had a financing arrangement with Mayo, who reached a deal in November to expand the Lex Brodie's chain by purchasing about 25 gas stations on Oahu that are owned by Dallas-based U.S. Restaurant Properties Inc.
The purchase was supposed to close this month, but the deal fell apart at the end of March after it sparked a complicated legal battle, said Richard S. Wilensky, general counsel for U.S. Restaurant.
U.S. Restaurant originally bought the stations in 1998 from Texaco Inc. and gave the master lease to the stations to BC Oil Ventures, a California firm that went bankrupt in 2000. After filing for bankruptcy, BC Oil subleased 10 of the stations to two Arco dealers at a monthly rent of $1,500 for each station.
The deal for Lex Brodie's to buy the gas stations required U.S. Restaurant to terminate any sublease agreements to gasoline dealers, according to a lawsuit.
U.S. Restaurant sued to evict the two Arco dealers, who walked away from their stations in March, though they are appealing their eviction. In the meantime, three other Arco dealers on Oahu have sued U.S. Restaurant to protect their leases.
The resulting legal mess effectively blocked the deal between U.S. Restaurant and Lex Brodie's, though it remains unclear exactly what led to the foreclosure of Lex Brodie's, a long-standing Hawaii business.
Alexander Brodie, a respected member of the Hawaii community, started Lex Brodie's on Queen Street in 1961. Brodie met Mayo in the early 1980s after the Wall Street Journal ran an article about Brodie's tire business, Brodie recalled yesterday. The two became partners in 1983, and Mayo took over Lex Brodie's eight years later.
Brodie said he had heard that a lender was taking over the company, but said he hadn't talked with Mayo about the situation for the past six weeks or so. "I'm not in the inner sanctum any longer," Brodie said.
Finova, started in 1954 as Greyhound Financial Corp., filed one of the nation's largest bankruptcies in March 2001 as the result of bad loans. The Scottsdale, Ariz.,-based lender emerged from Chapter 11 reorganization in August after Warren Buffett's Berkshire Hathaway Inc. and Leucadia National Corp. said they would form a joint venture to loan $5.6 billion to Finova, which pledged all of its assets as collateral, according to Bloomberg News.