Union Acceptance Corporation Announces Rights Offering

    INDIANAPOLIS--April 6, 2001--Union Acceptance Corporation ("UAC") today announced that it would issue to holders of its outstanding Class A and Class B common stock, at no cost, subscription rights entitling such holders to purchase additional shares of Class A common stock.
    Holders of common stock will receive one basic subscription right representing the right to purchase one share of Class A common stock for each share of common stock held as of the close of business on the record date, or approximately 13.3 million additional shares in the aggregate. The price is estimated in the range of $5.00 to $5.50 per share. In addition to shares issuable upon exercise of such basic subscription rights, the Company will offer up to approximately an additional 4.3 million shares (assuming an offering price of $5.00 per share), for a total of up to approximately 17.6 million shares issuable in the offering, to provide for anticipated minimum purchase rights of standby purchasers and oversubscription rights of shareholders.
    "We invite existing shareholders to participate with management in an expansion of UAC's capital foundation," said John Stainbrook, Chief Executive Officer. "This offering will support our future growth and our overall capital strategy as we move toward enhancing our ratio of equity to managed assets. Market liquidity is expected to increase through this offering as the number of shares of common stock outstanding following the execution of this offering is expected to total at least 29 million. As an additional step in addressing market liquidity, at our 2001 annual meeting, we expect to propose the elimination of voter preferences for the Class B common stock through the conversion of the two existing classes of common stock to a single common class."
    Certain executive officers and members of the board of directors have expressed interest in exercising their basic subscription rights, and in some cases their oversubscription rights. Together with other principal shareholders, this group is expected to subscribe for approximately 6.4 million shares or approximately 40% of the anticipated 16 million shares offered. The Company expects to identify standby purchasers to purchase shares in the offering to the extent that shares remain available at the expiration date. In addition, shareholders who exercise their basic subscription rights in full will also have the ability to purchase additional shares of Class A common stock at the offering price on a pro rata basis to the extent shares remain available after minimum purchase rights of the standby purchaser have been satisfied. The subscription rights will be transferable only to affiliates and related parties.
    The record date is expected to be on or around May 15, 2001, or such later date on or after which the Registration Statement becomes effective. The offering is expected to expire on or around June 11, 2001. The determination of the price and number of shares each shareholder will be entitled to purchase will be made on or around the record date.
    As soon as practicable after the record date, the Company expects to mail to its shareholders of record a final prospectus for the rights offering accompanied by a subscription rights certificate and related instructions for exercising their rights. The prospectus will contain a description of the rights offering and other relevant information.
    A Registration Statement relating to the offering of these rights has been filed with the Securities and Exchange Commission on April 6, 2001, but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the Registration Statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state or jurisdiction.

    Corporate Description

    UAC is one of the nation's largest independent, indirect automobile finance companies. The Company's primary business is acquiring, securitizing and servicing prime retail installment sales contracts. These contracts are originated by dealerships affiliated with major domestic and foreign automobile manufacturers. The Company is focused on the upper-end of the credit quality spectrum. UAC commenced business in 1986 and currently acquires receivables from over 5,400 manufacturer-franchised dealerships in 40 states. By using state-of-the-art technology in a highly centralized underwriting and servicing environment, UAC enjoys one of the lowest cost operating structures in the independent prime automobile finance industry. More information on UAC can be obtained from its web site at www.unionacceptance.com.

    Forward Looking Information

    This news release contains forward-looking statements regarding capital strategies, equity ratios, market liquidity and other matters. These statements relate to the Company's future plans, objectives, expectations and intentions, and the assumptions underlying or relating to any of these statements. Readers are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including important factors detailed in the Company's April 6, 2001 registration statement on Form S-2 and the Company's annual report on Form 10-K for the fiscal year ended June 30, 2000, both of which were filed with the Securities and Exchange Commission.