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Ugly Duckling Announces Increase in Revolving Credit Facility

4 September 1998

Ugly Duckling Corporation Announces Increase in Revolving Credit Facility

    PHOENIX--Sept. 4, 1998--Ugly Duckling Corporation (Nasdaq NM: UGLY) today announced approval from GE Capital to increase the Company's Revolving Credit Facility from $100 million to $125 million and to expand the facility's terms to allow the Company to borrow against its used car inventory. The Company currently has $76 million outstanding under its existing facility.
    The Company intends to use the facility for ongoing operations and noted that the facility will not be affected by the pending split-up of Ugly Duckling into two public companies. Under the proposed split-up, approved by Ugly Duckling shareholders at the Aug. 31, 1998, annual meeting, all of Ugly Duckling's non-dealership operations would be transferred to a new, wholly owned subsidiary of the Company, Cygnet Financial Corporation.
    All material terms and conditions of the increased facility have been approved, although the transaction is subject to the completion and execution of final loan documents.
    Headquartered in Phoenix, Ariz., Ugly Duckling Corporation is a used car sales and finance company that operates the nation's largest chain of used car dealerships focused exclusively on the sub-prime market. The Company underwrites, finances and services sub-prime contracts generated at its 50 Ugly Duckling dealerships. Cygnet Financial provides operating lines of credit and other financing arrangements for non-affiliated used car dealers. The Company also acquires economic interests in distressed portfolios, which it intends to transfer to Cygnet Financial on the effective date of the split-up.
    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, Ugly Duckling Corporation 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's Discussion and Analysis of Financial Condition and Results of Operations-Risk Factors," "Factors That May Affect Future Results and Financial Condition" and "Factors That May Affect Future Stock Performance" in Ugly Duckling Corporation's most recent reports on Form 10-K and Form 10-Q (including Exhibit 99 to any such Form 10-Q), factors detailed in the section "Risk Factors" in Ugly Duckling Corporation's definitive proxy statement dated Aug. 4, 1998, and elsewhere in Ugly Duckling Corporation's Securities and Exchange Commission filings.
    A registration statement (File No. 333-57323) 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, AZ 85016, telephone 602/852-6600. For more complete information about the split-up transaction, the related rights offering and their impact on Ugly Duckling Corporation and Cygnet, obtain an Ugly Duckling Corporation definitive proxy statement and Cygnet prospectus as indicated above.