Ugly Duckling Corp. To Evaluage Sale or Spin-Off of Non-Dealership Operations
PHOENIX--(BUSINESS WIRE)--Dec. 4, 1997--Ugly Duckling Corp.
(Nasdaq NM: UGLY) Thursday announced that its board of directors has
authorized management to evaluate strategic alternatives for certain
of the company's business segments.
The analysis will consider, among other things, the sale to a
third-party or spin-off to the company's stockholders of one or both
of the company's subsidiaries, Champion Financial Services and Cygnet
Finance. Champion Financial Services purchases sub-prime finance
contracts from non-affiliated third-party dealers via a network of 83
branches.
Cygnet Finance provides operating lines of credit and other
financing arrangements for non-affiliated used car dealers. The
company is not contemplating any change in its primary business of
selling and financing used cars to sub-prime borrowers through its 36
Ugly Duckling dealerships.
Commenting on the announcement, Ernest C. Garcia II, chairman
and chief executive officer of Ugly Duckling, said, "It has become
apparent over the past few months that we have the ability,
opportunity and financial strength to expand our Ugly Duckling
dealership operations, both internally and through acquisitions.
"Given the growth potential we foresee in our dealership
business, we want to consider whether our shareholders would be
better served by our focusing on this core business and spinning off
or selling certain other company operations.
"If made, such a move would enable us to concentrate management's
time and the company's financial resources on our core operations and
allow each business to progress under its own management and
corporate structure. The result could improve the company's
long-term success and enhance shareholder value.
"Further, we would also expect that such a change, if deemed the
best course of action, might make it easier for the investment
community to analyze and evaluate the companies," Garcia
concluded.
It is anticipated that the strategic evaluation will take several
months to complete and that any recommendation to the company's board
of directors is not likely until the first half of 1998.
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. The company underwrites, finances and services sub-prime
contracts generated at its 36 Ugly Duckling dealerships, contracts
generated by third-party used car dealers and purchased by its 83
Champion Financial Services branch offices and contracts originated
by third-party dealers and financed by its Cygnet Finance subsidiary. |
