National Auto Credit, Inc.
16 March 1998
National Auto Credit, Inc.
SOLON, Ohio, March 16 -- National Auto Credit, Inc.
announced today that it filed a Form 8-K with the Securities and
Exchange Commission relating to the previously disclosed resignation of three
of its directors (who served on the prior Special Committee of the Board of
Directors). On March 9, 1998, the Special Committee reported on its
investigation of information provided by Deloitte & Touche, LLP, the Company's
former auditors. Upon delivery of that report, the Special Committee that
issued it ceased to exist pursuant to the resolutions that created the Special
Committee and the positions of Chairman and President were reinstated to
Messrs. Frankino and Bronchetti, respectively.
The report did not reach any conclusions with respect to proof of
wrongdoing by the Company's officers or employees, nor did it reach any
conclusions regarding any impact on the Company's financial statements or
public reporting.
Each of the former directors, J. Hunter Brown, Noah T. Herndon and Per E.
Hoel, issued resignation letters dated March 10, 1998. The resignation
letters state in part that "(a)t a Special Meeting of the Board of Directors
held March 9, 1998, the three members of the Special Committee proposed that,
in order to restore the Company's credibility and thereby preserve its
viability, the Board should request the resignations of Sam Frankino,
Chairman, and Robert J. Bronchetti, President, and should also request Mr.
Frankino, the Company's majority shareholder, to place his shares in a voting
trust. The four remaining directors, Mr. Frankino, Mr. Bronchetti, (Mr.) John
Gleason and (Mr.) James McNamara, voted against adoption of resolutions to
this effect."
Based upon information available to them, a majority of the directors
questioned the foundation and appropriateness of certain of the
recommendations made by the former Special Committee.
On the evening of Monday, March 9, 1998, subsequent to the above
referenced resignations, a second meeting of the Board of Directors was
convened. At that meeting, the Board of Directors accepted the resignation of
Mr. Bronchetti as an officer and director, and authorized the continued
engagement of a management search firm to assist in the search for qualified
individuals to fill certain key management positions, including President and
Chief Executive Officer.
The Company has been informed by the New York Stock Exchange, Inc., that
it intends to suspend trading in the Common Stock of the Company prior to the
opening of trading on March 16, 1998, and that, following suspension,
application will be made to the Securities and Exchange Commission to delist
the Common Stock of the Company. The Company stated that it regrets the
action by the NYSE and intends to appeal the decision, or, alternatively, seek
listing privileges on another stock exchange or market. On March 11, 1998,
the Company received notice that the SEC had issued a formal order of private
investigation of the Company. The Company also stated that it will fully
assist and cooperate with all authorities regarding the Company.
As previously disclosed on March 9, 1998, a new standing Special Committee
was created, consisting of Mr. John Gleason, Mr. James McNamara and Mr.
William Marshall, all of whom will comprise the Compensation Committee of the
Board. The members of the Audit Committee are Messrs. McNamara and Marshall.
The statements contained in this release that are not purely historical
are forward looking statements within the meaning of the Securities and
Exchange Act of 1934. Among the factors that could cause actual results to
differ materially from the forward looking statements are the potential for
greater than anticipated non-performing contracts, the potential for lower
than anticipated recoverability of amounts advanced to the Company's member
dealers, availability of funds under the Company's financing arrangements, and
other factors as discussed in the Company's reports filed with the Securities
and Exchange Commission.
SOURCE National Auto Credit, Inc.