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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 25, 1998 (Date of earliest event reported)
UGLY DUCKLING CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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<S> <C> <C>
DELAWARE 000-20841 86-0721358
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
</TABLE>
2525 East Camelback Road, Suite 500, Phoenix, Arizona 85016
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (602) 852-6600
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On September 25, 1998, Ugly Duckling Corporation and Cygnet Financial
Corporation terminated the Rights Offering described in Cygnet's Prospectus
dated August 26, 1998. The Rights Offering was terminated primarily due to lack
of market acceptance resulting in an inadequate level of subscriptions necessary
to meet certain minimum requirements for Nasdaq listing of Cygnet's Common
Stock. As a result, the Split-up described in Ugly Duckling's Proxy Statement
dated August 24, 1998 will not occur on September 30, 1998, if at all.
The termination of the Rights Offering does not affect the Exchange Offer
announced by Ugly Duckling on September 17, 1998, through which Ugly Duckling is
offering to exchange up to $32.5 million principal amount of its 12%
Subordinated Debentures due 2003 for up to 5,000,000 shares of Common Stock at
the rate of $6.50 in principal amount for each share exchanged. The Exchange
Offer is scheduled to expire Monday, October 19, 1998.
Despite termination of the Rights Offering and the corresponding decision
not to proceed with the Split-up as contemplated, Ugly Duckling continues to
evaluate its options regarding the separation of its dealership and
non-dealership operations. Even though the Split-up will not be consummated as
contemplated, if at all, Ugly Duckling does not anticipate that terminating the
Rights Offering will have any significant current impact on Ugly Duckling's
consolidated financial statements, other than the write-off of expenses
incurred related to the Rights Offering expected to approximate $1.0 million
after income taxes. Individuals contemplating whether to participate in the
Exchange Offer should consider the possibility that Ugly Duckling could later
decide to retain rather than separate its non-dealership operations, in which
case Ugly Duckling's consolidated financial statements would require
restatement to reflect the integration of certain financial results currently
attributed to discontinued operations.
On September 28, 1998, Ugly Duckling and Cygnet issued a press release
relating to the termination of the Rights Offering. A copy of the press release
is filed herewith as Exhibit 99.2 and is hereby incorporated by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
EXHIBIT DESCRIPTION
NUMBER
- ------- -----------
4.1 Offering Circular dated September 17, 1998*
4.2 Supplement dated September 28, 1998 to Offering Circular dated
September 17, 1998
99.1 Press Release dated September 17, 1998*
99.2 Press Release dated September 28, 1998
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*Previously filed
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UGLY DUCKLING CORPORATION
(Registrant)
By
--------------------------
(Signature)
Steven P. Johnson
Senior Vice President
Date September 28, 1998
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
4.1 Offering Circular dated September 17, 1998*
4.2 Supplement dated September 28, 1998 to Offering Circular dated September 17, 1998
99.1 Press Release dated September 17, 1998*
99.2 Press Release dated September 28, 1998
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* Previously filed
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Exhibit 4.2
UGLY DUCKLING CORPORATION
SUPPLEMENT DATED SEPTEMBER 28, 1998
TO
OFFERING CIRCULAR DATED SEPTEMBER 17, 1998
The Rights Offering described in Cygnet's Prospectus dated August 26,
1998, a copy of which accompanied Ugly Duckling's Offering Circular dated
September 17, 1998, and referred to in the Sections "Summary of Exchange Offer
- - The Company" and "Business", has been terminated. The Rights Offering was
terminated primarily due to lack of market acceptance resulting in an
inadequate level of subscriptions necessary to meet certain minimum
requirements for Nasdaq listing. The termination of the Rights Offering does
not affect the Exchange Offer, which was announced on September 17, 1998 and is
scheduled to expire on October 19, 1998.
Despite termination of the Rights Offering and the corresponding decision
not to proceed with the Split-up as contemplated, Ugly Duckling continues to
believe that separating its dealership and non-dealership operations is in the
best interests of its shareholders and is continuing to evaluate its options in
achieving this objective. Accordingly, even though the Split-up will not be
consummated as contemplated, if at all, this development will have no current
impact on Ugly Duckling's consolidated financial statements. However,
individuals contemplating whether to participate in the Exchange Offer should
consider the possibility that Ugly Duckling could later decide to retain rather
than separate its non-dealership operations, in which case Ugly Duckling's
consolidated financial statements would require restatement to reflect the
integration of the financial results currently attributed to discontinued
operations.
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Exhibit 99.2
CONTACTS: Steven T. Darak
Senior Vice President and Chief Financial Officer
Ugly Duckling Corporation
(602) 852-6600
Judith A. Boyle
Associate General Counsel
Cygnet Financial Corporation
(602) 522-3116
Lori Parks/Eugene Heller
Silverman Heller Associates
(310) 208-2550
FOR IMMEDIATE RELEASE
UGLY DUCKLING CORPORATION AND CYGNET FINANCIAL
CORPORATION TERMINATE RIGHTS OFFERING
PHOENIX, Arizona (September, 28, 1998) -- Ugly Duckling Corporation (Nasdaq NM:
UGLY) and Cygnet Financial Corporation (Nasdaq NM: CGNTR) today announced they
have terminated the sale of Cygnet common stock in a rights offering to Ugly
Duckling's stockholders. The decision was primarily based on the lack of a
sufficient number of investors for Cygnet to meet Nasdaq requirements. The
Company is continuing to explore alternatives for separating its dealership and
non-dealership operations. In the meantime, Cygnet will remain a wholly owned
subsidiary of Ugly Duckling.
Stockholders who participated in the rights offering will receive a full
refund of their subscription payment. For information about this refund, please
contact Corporate Investor Communications, Inc., the designated information
agent, at 1-888-673-4478.
The termination of the rights offering does not affect the exchange offer
announced by Ugly Duckling on September 17, which enables stockholders to
exchange their shares in Ugly Duckling for 12%, five-year subordinated
debentures. Under the terms of that offer, each share
-more-
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Ugly Duckling Corporation and Cygnet Financial
Corporation Terminate Rights Offering
September 28, 1998
Page 2.
of common stock can be exchanged for $6.50 principal amount of debentures. The
expiration date of the exchange offer is October 19, 1998.
Headquartered in Phoenix, Arizona, 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 51 Ugly
Duckling dealerships. Cygnet Financial Corporation engages 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 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 August 4, 1998, and elsewhere in Ugly Duckling
Corporation's Securities and Exchange Commission filings.
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