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Ugly Duckling Closes its 18th Securitization

11 December 2000

Ugly Duckling Closes its 18th Securitization; Also Announces Need to Replace Warehouse Lender

    PHOENIX--Dec. 8, 2000--Ugly Duckling Corporation , the largest used car sales Company focused exclusively on the sub-prime market, today announced that it has completed its 18th securitization.
    The securitization was among the Company's largest, with loan principal balances being securitized totaling approximately $145 million and with Class A bonds being issued in the amount of $102.6 million. The coupon on the Class A bond is 6.76%, a 50 basis point reduction from the rate paid by the Company for its last securitization, which closed in August of this year.
    As is the Company's practice, the securitization was insured by a bond insurance company and carries an investment rating of "AAA" (Aaa). The Company received a Class A bond advance rate of 71% of the pledged principal balances, generally consistent with prior transactions. The credit enhancements for this transaction were increased. The Company increased its initial deposit into a reserve account from 4% to 6%, and reserve account maximums were raised from the traditional 8% to 11%. A termination event was added to this transaction that requires the Company to replace its warehouse lender by April 1, 2001.
    In this regard, the Company's primary warehouse lender under its existing $125 million facility recently informed the Company that as part of a global decision to exit the automobile finance market, it intends not to renew the existing warehouse line that terminates June 30, 2001. The Company believes that with its strong balance sheet, its five-year history of successful securitization transactions, and its proven business model, the Company will be able to replace its warehouse facility. To that end, the Company has received a non-binding proposal for alternative financing and intends to pursue other alternative financing sources.