Days after being sued by Chrysler Corp. for $550 million, beleaguered Twin Cities automotive king Denny Hecker is trying to close a deal to sell at least two of his dealerships to the Pohlad Group. If finalized this month as expected, the move would bring at least one drop of closure to Hecker's cascading economic woes.
The Pohlad Group, which owns the Minnesota Twins and is a partner of a new operation called Twin Cities Automotive, is close to a deal to buy Hecker's Volkswagen and Hyundai dealerships in Inver Grove Heights, according to sources familiar with the discussions.
Hecker officials say the negotiations are continuing but declined further comment.
The Pohlad Group issued a statement Tuesday saying, "Twin Cities Automotive Group confirmed that it has been exploring for some time the possible purchase of dealerships from the Denny Hecker Automotive Group. However, no final deal has been reached."
Peter Hasselquist, president, CEO and co-owner of Twin Cities Automotive, said the firm bought Sears BMW in Minnetonka and Coon Rapids Chrysler Jeep in May and is still "looking to grow."
"We are looking to be a premier automotive dealership group that would take care of servicing customers. The strategy would be upper-end franchises, which would be high-line imports and what we think would be premium brands," Hasselquist said.
Noting that tough times present good opportunities, he added, "We look at this as a favorable environment to be growing and so we are opportunistic as far as looking at the types of dealerships that we think we could add value to."
Later this year, the BMW dealership will move to a new lot on Wayzata Boulevard and will be renamed BMW of Minnetonka.
Business has cratered at Hecker's ubiquitous car dealerships and his rental car operation is in bankruptcy. But he's got lots of company. Hundreds of dealerships across the country have closed in the last year as consumers stopped buying vehicles.
Ford announced Tuesday that its January sales plummeted 40 percent over last January. And General Motors recently announced that it would lay off more workers after dismal sales.
Chrysler's vehicle sales dropped 55 percent last month as more consumers buttoned their wallets. In its complaint, Chrysler contends that the loans and financing agreements extended to Hecker are all "cross-guaranteed, cross-defaulted and cross-collateralized" and it wants the full unpaid principal and interest.
Hecker's troubles moved months ago from the showroom to the courtroom as the economy soured.
In November, he sued his longtime business partner, Chrysler Financial, for yanking his credit lines on 13 of his 21 dealerships. Chrysler has long footed the tab for much of Hecker's vehicle inventory. It offered consumer financing for Chryslers, Volkswagens and Hyundais, and put up the cash for his purchase of Advantage Rent A Car.
After filing the lawsuit against Chrysler for breach of contract, Hecker shut six Minnesota dealerships, sold one dealership in California and made plans to sell the VW and Hyundai stores in Minnesota. General Motors sued Hecker in federal court last fall. Ford sued next, demanding a return of $3.1 million in inventory. In December, Hecker's car rental business sought bankruptcy protection and laid off 400 workers.
Then on Jan. 23, Chrysler Financial filed suit against Hecker in Hennepin County District Court, charging breach of contract and seeking $550 million in unpaid loans. The amount includes $50 million that "was loaned directly to Hecker personally," the complaint said.
Timothy Thornton, a lawyer with Briggs & Morgan who represents Hecker, said Chrysler's claim represents Hecker's full credit limit -- not the amount Hecker actually owes.
"There has been a substantial retirement of the amount due," Thornton said. "Chrysler has repossessed and liquidated a significant amount of collateral, and Chrysler has seized a significant amount of cash that was in accounts, some of which related to Chrysler's collateral and some of which didn't."
Asked how much debt remains, Thornton said he didn't know. "That is one of the things we have tried to sort out with Chrysler."
At his peak, Hecker had 21 dealerships. Six have closed. Three have either been sold or are nearing a sale. As for the others, Thornton said, "Things are in a state of flux."
Asked if Hecker will be filing for bankruptcy soon, Thornton said, "We'll see. That is not currently under consideration, but a lot of things are going on."
Dee DePass • 612-673-7725