Stockholders Approve Ugly Duckling Corporation Split-Up
2 September 1998
Stockholders Approve Ugly Duckling Corporation Split-Up; Cygnet Financial Corp. Rights Offering Begins
PHOENIX--Sept. 2, 1998--At the Aug. 31, 1998, annual meeting of stockholders of Ugly Duckling Corp. , 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.
This press release may include statements that may constitute forward-looking statements, usually containing the words "believe," "estimate," "project," "expects" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. By making these forward-looking statements, Cygnet undertakes no obligation to update these statements for revisions or changes after the date of this press release. Factors that could cause or contribute to such differences include, but are not limited to, factors detailed in this press release and in the sections entitled "Management Discussion and Analysis of Financial Condition and Results of Operations," and "Risk Factors," and elsewhere in Cygnet's Registration Statement on Form S-1 (File No. 333-57323).
As noted above, a registration statement relating to the Cygnet securities (rights and Cygnet common stock) has been filed with and declared effective by the Securities and Exchange Commission. This discussion of the split-up transaction and the related rights offering 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 in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The securities sold in the rights offering will be offered only by means of a Cygnet prospectus. Copies of the prospectus of Cygnet dated Aug. 26, 1998, relating to the rights offering may be obtained by contacting: Steven P. Johnson, General Counsel of Cygnet, 2525 E. Camelback Road, Suite 1150, Phoenix, Ariz. 85016; tel: 602/852-6600. For more complete information about the split-up transaction, the related rights offering and their impact on Ugly Duckling Corp. and Cygnet, obtain an Ugly Duckling Corp. definitive proxy statement and Cygnet prospectus as indicated above.