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Insurance Auto Auctions, Inc. Announces Tender Offer and Consent Solicitation for Its 11% Senior Notes Due 2013

WESTCHESTER, Ill.--Insurance Auto Auctions, Inc. (the “Company”) announced today that it is offering (the “Offer”) to purchase for cash any and all of its outstanding $150,000,000 aggregate principal amount of 11% Senior Notes due 2013 (the “Notes”), on the terms and subject to the conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated March 22, 2007 and the accompanying Consent and Letter of Transmittal (together, the “Offer Documents”). The Company is also soliciting consents (the “Consent Solicitation”) from holders of the Notes for certain amendments that would, among other things, eliminate substantially all of the restrictive covenants and certain events of default contained in the indenture under which the Notes were issued. Adoption of the proposed amendments requires the consent of holders of at least a majority of the aggregate principal amount of the Notes outstanding.

As previously announced on December 22, 2006, the Company announced that it plans to combine operations with ADESA, Inc., which has entered into a definitive merger agreement under which affiliates of Kelso & Company, GS Capital Partners, ValueAct Capital and Parthenon Capital will acquire all of ADESA, Inc.’s outstanding common stock for $27.85 per share in cash (the “Merger”). The completion of the Offer and Consent Solicitation is not a condition to the consummation of the Merger.

The Consent Solicitation will expire at 5:00 p.m., New York City time, on April 5, 2007, unless earlier extended or terminated (such date and time, as the same may be modified, the “Consent Time”). The Offer will expire at 8:00 a.m., New York City time, on April 23, 2007, unless extended or earlier terminated (such date and time, as the same may be modified, the “Expiration Time”).

The total consideration for each $1,000 principal amount of Notes validly tendered and not properly withdrawn pursuant to the Offer and delivery of consents pursuant to the Offer Documents on or prior to the Consent Time shall be equal to $1,120.00. The total consideration includes a payment of $30 per $1,000 principal amount of Notes payable only in respect of Notes tendered on or prior to the Consent Time (the “Consent Payment”).

Holders who validly tender their Notes on or prior to the Consent Time will be eligible to receive the total consideration. Holders who validly tender their Notes after the Consent Time, but on or prior to the Expiration Time, will be eligible to receive the total consideration less the Consent Payment. In either case, all Holders who validly tender their Notes will receive accrued and unpaid interest up to, but not including, the date of settlement.

Holders who tender their Notes must consent to the proposed amendments. Tendered Notes may not be withdrawn and consents may not be revoked after the Consent Time.

The Company’s Offer and Consent Solicitation are conditioned on, among other things, the following:

  • the closing of the Merger shall have occurred;
  • all of the loans, reimbursement obligations and other obligations and liabilities of the Company under the Company's Credit Agreement, dated May 19, 2005, shall have been paid in full and all commitments of the lenders thereunder to make loans or issue letters of credit shall have been terminated;
  • the Company shall have received valid consents from holders of a majority of the aggregate principal amount of the Notes; and
  • a supplemental indenture which implements the proposed amendments in respect of the Notes upon receipt of the consents required for those amendments shall have been executed and delivered.

The Company has retained Bear, Stearns & Co. Inc. to act as sole Dealer Manager for the Offer and as the Solicitation Agent for the Consent Solicitation. Bear, Stearns & Co. Inc. can be contacted at (212) 272-5112 (collect) or (877) 696-BEAR (toll free). D.F. King & Co., Inc. is the Information Agent and can be contacted at (212) 269-5550 (collect) or (888) 887-1266 (toll free). Copies of the Offer Documents and other related documents may be obtained from the Information Agent.

The Offer and Consent Solicitation are being made solely on the terms and conditions set forth in the Offer Documents. Under no circumstances shall this press release constitute an offer to buy or the solicitation of an offer to sell any securities of the Company. This press release also is not a solicitation of consents to the proposed amendments to the indenture. The Offer and Consent Solicitation are not being made to holders of Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction.

None of the Company, the Dealer Manager or the Information Agent makes any recommendation as to whether holders of the Notes should tender their Notes or consent to the proposed amendments to the indenture and no one has been authorized by any of them to make such recommendations. Holders must make their own decisions as to whether to consent to the proposed amendments to the indenture and to tender the Notes.

About Insurance Auto Auctions, Inc.

Insurance Auto Auctions, Inc., founded in 1982, a leader in automotive total loss and specialty salvage services in the United States, provides insurance companies with cost-effective, turnkey solutions to process and sell total-loss and recovered-theft vehicles. The Company currently has 99 sites across the United States. Additional information about Insurance Auto Auctions, Inc. is available on the World Wide Web at www.iaai.com.

Forward-Looking Statements

The statements in this release should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in IAAI filings with the SEC, including the Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. The statements contained in this release that are not historical facts are forward-looking statements. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected, expressed or implied by such forward-looking statements, including, but not limited to: the ability to obtain regulatory approvals of the transaction on the proposed terms and schedule; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers and other risks and uncertainties associated with the contemplated transactions. In some cases, you can identify forward-looking statements by use of words such as “may,” “will,” “should,” “anticipates,” “predict,” “projects,” “targeting,” “potential,” “or “contingent,” the negative of these terms, or other similar expressions. Actual results could differ materially from those discussed in or implied by forward-looking statements for various reasons, including those discussed in “Risk Factors” in IAAI's Form 10-K. You should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, the parties undertake no obligation to publish, update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.