Stockholders Approve Ugly Duckling Corporation Split-Up; Cygnet Financial Corp. Rights Offering Begins
PHOENIX--(BUSINESS WIRE)--Sept. 2, 1998--At the Aug. 31, 1998, annual meeting of stockholders of Ugly Duckling Corp. (Nasdaq/NM:UGLY), stockholders approved a proposal to allow Ugly Duckling to proceed with a plan to split its dealership and non-dealership operations into two separately held public companies.
As previously announced, if the split-up transaction is effected, Cygnet Financial Corp. (Cygnet), a wholly owned subsidiary of Ugly Duckling, will acquire Ugly Duckling's bulk purchasing and certain servicing operations; its third-party dealer financing operations (excluding the branch office network that Ugly Duckling closed in the first quarter of 1998); and substantially all of the assets and certain liabilities acquired by Ugly Duckling in its transactions with First Merchants Acceptance Corp. and Reliance Acceptance Group Inc., in exchange for preferred stock and cash.
As part of the split-up transaction, Cygnet would be further capitalized through an offering of rights to purchase common stock of Cygnet. The rights offering began yesterday, with the rights now listed on the Nasdaq National Market under the symbol "CGNTR."
The rights offering provides that each holder of record of Ugly Duckling common stock as of Aug. 17, 1998, will receive one right for every four shares of Ugly Duckling common stock held on the record date. Each right represents the right to subscribe for one share of Cygnet common stock at an exercise price of $7.00 and includes certain over-subscription privileges. The rights are exercisable only for a limited period ending at 5 p.m. (Minnesota time) on Sept. 21, 1998, or such later date to which the rights offering is extended.
The issuance of Cygnet common stock and the effectuation of the split-up transaction are contingent on certain conditions. There can be no assurance that the split-up transaction will be effected. The rights offering and/or split-up transaction may be abandoned or postponed at any time for any reason at the sole discretion of Ugly Duckling's board of directors.
With headquarters in Phoenix, upon the effective date of the split-up transaction, Cygnet will engage in the business of providing various financial services primarily to the sub-prime segment of the automobile financing industry.
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