Ugly Duckling Corp. Split-Up: Cygnet Financial Corp. Files Initial Registration Statement to Register Securities for Split-Up
PHOENIX--(BUSINESS WIRE)--June 22, 1998--Ugly Duckling Corp. (Nasdaq/NM:UGLY) (UDC) Monday announced the filing of a registration statement with the Securities and Exchange Commission by Cygnet Financial Corp., a newly formed subsidiary of UDC, relating to the previously disclosed plan to separate UDC into two publicly traded companies (the "Split-up").
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 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 a record date 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 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 a "fairness opinion" from an investment banking firm, 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. |
