Ugly Duckling Corp. Split-up: Cygnet Financial Corp. Registration Statement Declared Effective
PHOENIX--(BUSINESS WIRE)--August 4, 1998--Ugly Duckling Corp.
("UDC") (Nasdaq NM:UGLY) Tuesday announced that the registration statement filed with the Securities and Exchange Commission ("SEC") by Cygnet Financial Corp. ("Cygnet"), a newly formed subsidiary of UDC, relating to the previously disclosed plan to separate UDC into two publicly traded companies (the "Split-up"), was declared effective by the SEC on Aug. 4, 1998.
As part of the Split-up, Cygnet would acquire and operate substantially all of the non-dealer finance operations currently conducted by UDC, including its bulk purchasing and certain servicing operations and its third-party dealer financing operations.
UDC would retain and continue to operate its "buy here-pay here" dealerships and to service the finance receivables generated by those dealerships, as well as certain other operations. If the Split-up transaction is completed, UDC and Cygnet would be owned, operated and managed as separate public companies.
The registration statement (File No. 333-57323) provides for a rights offering (the "Rights Offering"), which includes, among other things, (a) the distribution of transferable rights to holders of UDC common stock to subscribe for shares of common stock of Cygnet, and (b) the sale of shares of Cygnet common stock upon exercise of these rights.
Pursuant to the Rights Offering, each holder of UDC common stock as of Aug. 17, 1998, would receive one right for every four shares of UDC common stock. Each right would represent the right to subscribe for one share of Cygnet common stock at an exercise price of $7.
The Rights Offering is expected to commence on or about Sept. 1, 1998, assuming that UDC stockholders approve the Split-up transaction at UDC's Annual Meeting of Stockholders scheduled for Monday, Aug. 31, 1998, at 4 p.m. in Phoenix.
The Split-up transaction, including the transfer of assets from UDC to Cygnet and the issuance of the rights and Cygnet common stock, is subject to a number of contingencies. These contingencies include, without limitation, the approval of the Split-up by the stockholders of UDC, the finalization of an appraisal of the assets to be transferred, and various other consents and approvals.
There can be no assurance that all of the conditions to the Rights Offering or the Split-up will be satisfied or that the Split-up can be effected or the rights issued.
With headquarters in Phoenix, Ugly Duckling is a used car sales and finance company that operates the nation's largest chain of used car dealerships focused exclusively on the sub-prime market. UDC underwrites, finances and services sub-prime contracts generated at its UDC dealerships.
Cygnet provides operating lines of credit and other financing arrangements for non-affiliated used car dealers. UDC also acquires economic interests in distressed portfolios, which UDC intends to transfer to Cygnet on the effective date of the Split-up.
|
