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Registration No. 333-39997
Filed Pursuant to Rule 424(b)(3)
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Prospectus
9,611,985 shares of Common Stock of
UNITED AUTO GROUP, INC.
This Prospectus relates to 9,611,985 shares (the "Shares") of Voting
Common Stock, par value $0.0001 per share ("Common Stock") of United Auto Group,
Inc. a Delaware corporation ("UAG" or the "Company") owned by certain
stockholders of the Company (the "Selling Stockholders"). The Shares may be
offered by the Selling Stockholders from time to time in transactions on the New
York Stock Exchange (the "NYSE"), in negotiated transactions, through the
writing of options on the Shares or a combination of such methods of sale, at
fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Stockholders may effect such transactions by selling the
Shares in or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions). See "Selling Stockholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. The Company has agreed to bear all
expenses (other than selling discounts, concessions or commissions and certain
other fees and expenses of certain advisors to the Selling Stockholders) in
connection with the registration and sale of the Shares being offered by the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
The shares of Common Stock are listed on the NYSE under the symbol
"UAG." On December 2, 1997, the closing price of the Common Stock, as reported
by the NYSE, was $14-1/8 per share.
The Shares have not been registered for sale under the securities laws
of any state or jurisdiction as of the date of this Prospectus. Brokers or
dealers effecting transactions in the Shares should confirm the registration
thereof under the securities laws of the state in which such transactions occur,
or the existence of any exemption from registration.
See "Risk Factors" beginning on page 9 for a discussion of certain
factors that should be considered by prospective investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The date of this Prospectus is December 9, 1997
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SHARES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
Table of Contents
Page Page
Incorporation of Certain
Documents by Reference............. 3 Plan of Distribution............... 18
Prospectus Summary.................. 4 Legal Matters...................... 19
Risk Factors........................ 9 Independent Auditors............... 19
Use of Proceeds..................... 16 Available Information.............. 19
Selling Stockholders................ 17
Disclosure Regarding Forward-Looking Statements
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED (THE "EXCHANGE ACT"). ALL STATEMENTS OTHER THAN STATEMENTS
OF HISTORICAL FACTS INCLUDED IN THIS PROSPECTUS OR INCORPORATED HEREIN BY
REFERENCE REGARDING THE COMPANY'S FINANCIAL POSITION AND BUSINESS STRATEGY MAY
CONSTITUTE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE
EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN
GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS
PROSPECTUS, INCLUDING WITHOUT LIMITATION, IN CONJUNCTION WITH THE
FORWARD-LOOKING STATEMENTS UNDER "RISK FACTORS." ALL SUBSEQUENT WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS
BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
No automobile manufacturer has been involved, directly, or indirectly, in the
preparation of this Prospectus or in the offering being made hereby. No
manufacturer has made any statements or representations in connection with the
offering being made hereby or has provided any information or materials that are
used in connection with the offering being made hereby, and no manufacturer has
any responsibility for the accuracy or completeness of this Prospectus.
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Incorporation of Certain Documents by Reference
The following documents filed by the Company with the Commission are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-K (File No. 1-12297) for the
fiscal year ended December 31, 1996, filed pursuant to Section 13(a) of the
Exchange Act.
2. The Company's Quarterly Reports on Form 10-Q (File No. 1-12297) for
the fiscal periods ended March 31, 1997, June 30, 1997 and September 30, 1997.
3. The registration statement on Form 8-A (File No. 1-12297) filed by
the Company on October 9, 1996, which contains a description of the Company's
Common Stock.
4. The Company's Current Reports on Form 8-K (File No. 1-12297) filed by
the Company on January 23, 1997, March 3, 1997, March 10, 1997, March 21, 1997
(as amended by Form 8-K/A filed on April 30, 1997), April 21, 1997, May 9, 1997,
May 15, 1997 (as amended by Form 8-K/A filed on July 14, 1997), July 8, 1997,
July 15, 1997, August 7, 1997, September 24, 1997, October 31, 1997, November 6,
1997 and November 20, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to
termination of this offering of Common Stock shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the dates of
filing of such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
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Prospectus Summary
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and historical and pro
forma financial statements included elsewhere in this Prospectus or incorporated
by reference herein. Unless the context otherwise requires, references herein to
the "Company" or "UAG" include United Auto Group, Inc. and its subsidiaries, and
references herein to "Common Stock" refer to the Company's Voting Common Stock,
par value $0.0001 per share.
The Company
UAG is a leading acquirer, consolidator and operator of franchised
automobile and light truck dealerships and related businesses. The Company is
the second largest publicly-traded retailer of new motor vehicles in the United
States. As of October 31, 1997, UAG operated 58 franchises located in Arizona,
Arkansas, Connecticut, Florida, Georgia, Louisiana, Nevada, New Jersey, New
York, North Carolina, South Carolina, Tennessee and Texas and represented 27
American, Asian and European brands. As an integral part of its dealership
operations, UAG also sells used vehicles. All of UAG's franchised dealerships
include integrated service and parts operations, which are an important source
of recurring revenues. The Company also owns Atlantic Auto Finance Corporation
("Atlantic Finance"), an automobile finance company engaged in the purchase,
sale and servicing of primarily prime credit quality automobile loans originated
by both UAG and third-party dealerships.
The Company was incorporated in the State of Delaware in December 1990
and commenced dealership operations in October 1992. The Company's executive
offices are located at 375 Park Avenue, New York, New York 10152, and its
telephone number is (212) 223-3300.
Competitive Strengths
The Company has attained a leading position in its industry through a
series of acquisitions. The Company attributes its success and its continued
opportunities for growth and profitability to the following competitive
strengths:
Diverse Product and Geographic Portfolio. Since its initial acquisition in
October 1992, the Company has completed 19 dealership acquisitions through
September 30, 1997, which are organized into eight geographic hubs
including the New York, Atlanta and Phoenix metropolitan areas. Brand
portfolio is carefully managed to reduce the risks associated with both
changes in consumer preferences and dependence on any single manufacturer
or market segment. Also, geographic diversity mitigates the Company's
exposure to regional economic and weather conditions. The Company will
continue to target dealerships in the South, Southeast and Southwest
regions of the United States, which benefit from lower operating costs
than those of other regions and favorable climatic conditions throughout
the year.
Scale of Operations. The Company's scale of operations allows it to
enhance revenues and reduce costs relative to smaller dealership groups
and stand-alone dealerships. For example, through its United AutoCare
subsidiary, UAG dealerships market a variety of aftermarket products and
services that generate additional revenues previously captured by
third-party vendors. The Company believes that United AutoCare's size and
large customer pool allow it to provide credit insurance at more favorable
rates than its smaller competitors. The Company's bulk purchasing of
appearance packages and other aftermarket products provides opportunities
for improved margins relative to smaller dealership groups. UAG also
benefits from its large number of dealerships and high sales volumes when
negotiating floor plan financing rates. Also,
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the Company believes that its hub strategy provides opportunities to lower
used vehicle acquisition costs at the regional level.
Access to Capital Markets. The Company believes that its proven ability to
access the capital markets is a competitive advantage. The capital raised
allows the Company to implement its acquisition program in order to
continue to participate in the consolidation of the automotive retailing
industry. The Company is often sought out by potential sellers who are
attracted by UAG's ability to acquire their dealerships for a combination
of cash and stock.
Customer Focus. Central to UAG's overall philosophy is customer-oriented
service designed to meet the needs of an increasingly sophisticated and
demanding automotive consumer. Each of the Company's dealerships is a
full-service operation, providing sales, service and parts departments.
The Company seeks to provide its customers with a satisfying, pleasant and
informative retailing experience, which entails "one-stop" shopping
convenience, competitive pricing and a sales staff that is knowledgeable
about product offerings and responsive to a customer's particular needs.
Continuous training of the sales force focuses on providing skills that
improve its interactions with customers. A key management tool at UAG is
customer service index ("CSI") scores, which are derived from data
accumulated by manufacturers through customer surveys. These scores are
monitored carefully by management to improve dealership operations and are
used as a factor in determining compensation of general managers.
Business Strategy
UAG seeks to be a leader in the consolidation of the automotive retailing
industry and to increase shareholder value through a strategy that includes the
following principal elements:
Acquire and Integrate Profitable Dealership Operations. UAG seeks to
capitalize on continuing consolidation in the $675 billion U.S. automotive
retailing industry by selectively acquiring profitable dealerships. The
Company targets dealerships or dealership groups with established records
of profitability as well as with experienced management willing to remain
in place. The Company focuses on opportunities in geographic markets with
above-average projected population and job growth. Of the approximately
22,000 dealerships in the United States, the Company believes that at
least 2,000 dealerships, some of which are members of dealership groups,
meet its acquisition criteria. The Company may also target dealerships in
North American markets outside the United States. UAG is also creating
regional hubs of dealerships that will be able to share administrative and
other operations to reduce costs.
Grow Higher-Margin Operating Businesses. UAG is focusing on growing its
higher-margin businesses such as the retail sale of used vehicles,
aftermarket products and service and parts. UAG receives a steady supply
of used vehicles through trade-ins, vehicles coming off lease ("off-lease
vehicles") and used car auctions open only to new car dealers. In
addition, only new car dealers are able to sell used cars certified by
manufacturers. Through these programs, UAG is able to provide customers
with manufacturer-backed extended warranties and attractive financing on
their used car purchases. UAG also has the opportunity on each new or used
vehicle sold to generate incremental revenue from the sales of aftermarket
products, including accessories such as radios, cellular phones and
alarms, as well as agency services such as extended service contracts,
credit insurance policies and financing and lease contracts. Finally, each
UAG new car dealership offers an integrated service and parts department,
which provides an important recurring revenue stream to the Company's
dealerships.
Implement "Best Practices." The Chairman's Committee, comprised of senior
executive officers and key managers, meets regularly to review the
operating performance of individual dealerships
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as well as to examine important industry trends and, where appropriate,
recommend specific operating improvements. This facilitates implementation
of successful strategies throughout the organization so that each
dealership can benefit from the successes of the others as well as from
the knowledge and experience of UAG's senior management. Management also
attends various industry-sponsored leadership and management seminars and
receives continuing education in products, marketing strategies and
management information systems. The Company shares training techniques
across its dealership base and has made improving service absorption and
aftermarket revenues a Company-wide focus.
Generate Incremental Revenue From Automobile Finance Business. In 1996,
industry wide, greater than 70% of new and used automobiles purchased from
franchised dealerships and independent businesses were financed. To
further increase the incremental profit achievable through its vehicle
sales by capturing some of this financing business, the Company
established Atlantic Finance, an automobile finance company engaged in the
purchase, sale and servicing of primarily prime credit quality automobile
loans originated by both UAG and third-party dealerships. Led by an
experienced management team, Atlantic Finance seeks to grow by (i)
increasing its business with existing UAG dealerships, including those
with which it has yet to commence financing activities, (ii) commencing
financing activities with dealerships acquired by UAG in the future and
(iii) using its presence in its local operating markets to cultivate
relationships with additional unaffiliated dealerships.
Pending Acquisitions
Set forth below are all the material acquisitions with respect to which
the Company has recently reached definitive agreements (the "Pending
Acquisitions"). The automobile franchises to be acquired in the Pending
Acquisitions are set forth in the chart below. The sale of Shares hereunder is
not conditioned upon the consummation of any of the Pending Acquisitions, and no
assurance can be made that one or more of the Pending Acquisitions, each of
which is subject to customary conditions (including manufacturer approvals),
will not terminate prior to consummation.
On July 25, 1997, the Company reached a definitive agreement to acquire
the Lynn Alexander Group, located in San Angelo, Texas, for a purchase price of
$10.6 million in cash and a $1.3 million note. The Lynn Alexander Group had
approximately $90.0 million in revenues in 1996.
On July 25, 1997, the Company reached a definitive agreement to acquire
the Classic Auto Group, located in the Philadelphia, Pennsylvania, metropolitan
area, for a purchase price of $28.0 million in cash and a $2.0 million note. The
Classic Auto Group had approximately $233.0 million in revenues in 1996.
On September 25, 1997, the Company reached a definitive agreement to
acquire the Young Automotive Group, located in the Carolinas, Florida, Illinois
and Indiana, for a purchase price of $50.0 million in cash and $25.0 million in
Common Stock. The Young Automotive Group had approximately $379.2 million in
revenues in 1996.
Recent Change in Security Ownership
On December 8, 1997, a Schedule 13D was filed with the Commission by
Stephen Feinberg disclosing beneficial ownership of 919,600 shares, or 5.0%, of
UAG's outstanding Common Stock held by several entities over which Mr. Feinberg
has investment authority.
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Acquisition Summary
The following table sets forth information, as of October 31, 1997, with
respect to the dealerships that are owned by the Company and those that are
proposed to be acquired in the Pending Acquisitions:
<TABLE>
<CAPTION>
Date
Dealership Acquired Locations Franchises Held
- ---------- -------- --------- ---------------
<S> <C> <C> <C>
DiFeo Group
DiFeo Automotive Group 10/92 Danbury, CT Chevrolet-Geo, Hyundai,
Isuzu, Suzuki
Bound Brook, NJ Lexus
Jersey City, NJ Hyundai, Jeep-Eagle, Toyota
Tenafly, NJ BMW
Nyack, NY Mitsubishi, Toyota
DiFeo Nissan 11/92 Jersey City, NJ Nissan
DiFeo Chrysler-Plymouth 12/92 Jersey City, NJ Chrysler-Plymouth
Fair Honda 1/93 Danbury, CT Honda
Fair Dodge 2/93 Danbury, CT Dodge
Gateway 8/93 Toms River, NJ Mitsubishi, Toyota
Landers Auto 8/95 Benton, AR Chrysler-Plymouth, Dodge,
GMC Truck, Jeep-Eagle
Atlanta Toyota 1/96 Duluth, GA Toyota
United Nissan (GA) 5/96 Morrow, GA Nissan
Peachtree Nissan 7/96 Chamblee, GA Nissan
Sun Automotive Group 10/96 Phoenix, AZ BMW, Land Rover
Scottsdale, AZ Acura, Audi, Land Rover,
Lexus, Porsche,
Rolls-Royce/Bentley(a)
Evans Group 10/96 Duluth, GA BMW
Conyers, GA Nissan
United Nissan (TN) 10/96 Chattanooga, TN Nissan
Crown Automotive 3/97 Houston, TX Chrysler-Plymouth, Dodge,
Jeep-Eagle
Hanna Nissan 4/97 Las Vegas, NV Nissan
Staluppi Group 4/97 Long Island, NY Nissan(2), Toyota(2)
W. Palm Beach, FL Chrysler-Plymouth,
Infiniti, Jeep-Eagle,
Nissan, Toyota
Reed Group 5/97 Fayetteville, NC Chevrolet
North Charleston, SC Chevrolet
Summerville, SC Chevrolet-Geo, Oldsmobile
Lance Landers 6/97 Benton, AR Buick, Isuzu, Pontiac
Stone Mountain 8/97 Stone Mountain, GA Chrysler-Plymouth,
Jeep-Eagle
Shreveport Dodge 10/97 Shreveport, LA Dodge
Lynn Alexander Group (b) San Angelo, TX Chevrolet,
Chrysler-Plymouth, Dodge,
Jeep-Eagle, Nissan
Classic Auto Group (b) Cherry Hill, NJ Buick, Saab
Moorestown, NJ Chevrolet
Turnersville, NJ Acura, BMW, Buick,
Chevrolet, Honda, Nissan
</TABLE>
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<TABLE>
<CAPTION>
Date
Dealership Acquired Locations Franchises Held
- ---------- -------- --------- ---------------
<S> <C> <C> <C>
Young Automotive Group (b) Kissimmee, FL Toyota
Bloomington, IL Chevrolet
Indianapolis, IN Chevrolet, Honda, Isuzu
Tipton, IN Buick, Chevrolet, GMC
Truck, Oldsmobile, Pontiac
Ashville, NC Chevrolet
Goldsboro, NC Cadillac, Chevrolet,
Hilton Head, SC Oldsmobile
BMW, Buick, GMC Truck,
Pontiac
- ----------------------------
(a) Acquired February 1997.
(b) Acquisition pending.
</TABLE>
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Risk Factors
Prospective investors should consider carefully the principal risk
factors set forth below as well as the other information set forth in this
Prospectus in evaluating the Company and its business before purchasing the
shares of Common Stock offered hereby.
Influence of Automobile Manufacturers
Each of the Company's dealerships operates pursuant to a franchise
agreement between the applicable automobile manufacturer (or authorized
distributor thereof, referred to herein as the "manufacturer") and the
subsidiary of the Company that operates such dealership, and the Company is
dependent to a significant extent on its relationship with such manufacturers.
Manufacturers exercise a great degree of control over dealerships, and the
franchise agreement provides for termination or non-renewal for a variety of
causes. The Company from time to time has been in non-compliance with certain
provisions of certain of its franchise agreements, such as the obligation to
obtain prior manufacturer approval of changes in dealership management. Actions
taken by manufacturers to exploit their superior bargaining position could have
a material adverse effect on the Company. For example, Saturn Corporation's
refusal to grant its approval for the Company's initial public offering in
October 1996 (the "IPO") and its assertion of an alleged right of first refusal
with respect to one franchise necessitated the Company's transfer of the two
Saturn franchises in its DiFeo Group to an affiliated holding company. See "--
Stock Ownership/Issuance Limits." Furthermore, prior manufacturer approval is
required with respect to acquisitions of automobile dealerships, and a
manufacturer may deny the Company's application to make an acquisition or seek
to impose further restrictions on the Company as a condition to granting
approval of an acquisition. See "-- Risks Associated with Acquisitions."
Many manufacturers attempt to measure customers' satisfaction with their
sales and warranty service experiences through systems, which vary from
manufacturer to manufacturer, generally known as the CSI. These manufacturers
may use a dealership's CSI scores as a factor in evaluating applications for
additional dealership acquisitions and other matters. Certain dealerships of the
Company have had difficulty from time to time meeting their manufacturers' CSI
standards. The components of CSI have been modified from time to time in the
past, and there is no assurance that such components will not be further
modified or replaced by different systems in the future. Failure of the
Company's dealerships to comply with the standards imposed by manufacturers at
any given time may have a material adverse effect on the Company.
The success of each of the Company's franchises is, in large part,
dependent upon the overall success of the applicable manufacturer. Accordingly,
the success of the Company is linked to the financial condition, management,
marketing, production and distribution capabilities of the manufacturers of
which the Company is a franchisee. Accordingly, events, such as labor strikes,
that may adversely affect a manufacturer may also adversely affect the Company.
For example, a strike of the independent truckers who distribute Chrysler
Corporation ("Chrysler") motor vehicles adversely affected the Company in the
second half of 1995. Similarly, the delivery of vehicles from manufacturers
later than scheduled, which may occur particularly during periods of new product
introductions, can lead to reduced sales during such periods. This has been
experienced at certain of the Company's dealerships from time to time, including
in the third quarter of 1996. Moreover, any event that causes adverse publicity
involving such manufacturers may have an adverse effect on the Company
regardless of whether such event involves any of the Company's dealerships.
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Stock Ownership/Issuance Limits
A number of manufacturers impose restrictions upon the transferability
of the Common Stock. The most prohibitive restrictions, imposed by American
Honda Motor Co., Inc. ("Honda"), provide that, under certain circumstances, the
Company may be forced to sell or surrender its Honda and Acura franchises if a
person or entity acquires a 5% ownership interest in the Company if Honda
objects to such acquisition within 180 days; however, so long as control of the
Company is held by its original non-public stockholders, any bank, mutual fund,
insurance company or pension fund may acquire up to a 10% ownership interest
(15% ownership interest in the case of any entity in its capacity as investment
advisor, trustee or custodian for the benefit of third parties) in the Company
without such consent but only if such bank, mutual fund, insurance company or
pension fund is not owned or controlled by or does not own 15% or more of, or
control, any entity (other than an automobile dealership) that competes with
Honda or its affiliates in manufacturing, marketing or selling automotive
products or services. Similarly, several manufacturers have the right to approve
the acquisition of 20% ownership interests in the Company.
In addition, the Company has agreed with Honda that no more than 40% of
the Company's capital stock (on a fully diluted basis) may be publicly held at
any time. The Company believes that slightly less than 40% of the Common Stock
(on a fully diluted basis) is currently publicly held. A substantial number of
shares of Common Stock are eligible for public sale pursuant to this Prospectus
and pursuant to the terms of Rule 144 under the Securities Act. The Company's
three largest stockholders are prohibited from selling any of their shares
without Honda's consent, although the Company expects that such prohibition will
be terminated in the near future. Similarly, a number of manufacturers,
including Chrysler, continue to prohibit changes in ownership that may affect
management control of the Company. In connection with the IPO, Chrysler agreed
that it will not consider the issuance of up to 40% of the Common Stock (on a
fully diluted basis) to be a change of control. However, future acquisitions or
sales of substantial amounts of shares in the market may affect management
control. Actions by its stockholders or prospective stockholders which would
violate any of the above restrictions are generally outside the control of the
Company, and if the Company is unable to renegotiate such restrictions, it may
be forced to terminate or sell one or more franchises, which could have a
material adverse effect on the Company. Since Honda has recently expressed an
unwillingness to relax its restrictions, the Company may be required to
terminate or sell 51% or more of the equity interests in its two Honda
franchises. Honda's current position may inhibit the Company's ability to
acquire dealership groups that include Honda franchises. Such restrictions also
may prevent or deter prospective acquirers from acquiring control of the Company
and, therefore, may adversely impact the value of the Common Stock. Finally,
Honda has the right to approve any future public offerings of capital stock, and
the consent of other manufacturers may be needed as well. This may impede the
Company's ability to raise required capital. See "--Capital Requirements."
Risks Associated with Acquisitions
The Company's growth depends in large part on its ability to manage
expansion, control costs in its operations and consolidate dealership
acquisitions into existing operations. This strategy will entail reviewing and
potentially reorganizing acquired dealership operations, corporate
infrastructure and systems and financial controls. Unforeseen expenses,
difficulties, complications and delays frequently encountered in connection with
the rapid expansion of operations could inhibit the Company's growth.
There can be no assurance that the Company will identify acquisition
candidates that would result in the most successful combinations or that
acquisitions will be able to be consummated on acceptable terms. The magnitude,
timing and nature of future acquisitions will depend upon various factors,
including the availability of suitable acquisition candidates, the negotiation
of acceptable terms, the Company's financial capabilities, the availability of
skilled employees to manage the acquired
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companies and general economic and business conditions. In particular, the
increasing competition among potential acquirers has resulted in higher prices
being paid for attractive targets.
In addition, the Company's future growth via acquisition of automobile
dealerships will depend on its ability to obtain the requisite manufacturer
approvals. There can be no assurance that manufacturers will grant such
approvals. A number of manufacturers have policies limiting the number of
franchises that may be held by any one company. For example, it is currently the
policy of Toyota Motor Sales ("Toyota") to restrict any company from holding
more than seven Toyota or more than three Lexus franchises and restrict the
number of franchises held within certain geographic areas. Toyota has also
recently announced a policy requiring a nine-month waiting period between
acquisitions of Toyota franchises and between acquisitions of Lexus franchises.
The Company believes that Toyota will relax such restrictions in the near
future. Similarly, it is currently the policy of Honda to restrict any company
from holding more than seven Honda or more than three Acura franchises and
restrict the number of franchises held within certain geographic areas. Honda
and Toyota have sued a competitor of the Company to enforce such policies. At
October 31, 1997, the Company held 58 franchises, including 14 Chrysler
franchises, ten Nissan franchises (of which one is Infiniti), nine Toyota
franchises (of which two are Lexus), eight General Motors Corporation ("GM")
franchises, three BMW franchises and two Honda franchises (of which one is
Acura). The Company is among the largest Chrysler, Toyota, Nissan and BMW
dealers in the United States. See "-- Influence of Automobile Manufacturers."
Alternatively, in connection with acquisitions by the Company, one or
more manufacturers may seek to impose further restrictions on the Company in
connection with their approval of an acquisition. For example, each of GM and
Chrysler conditioned its approval of the acquisition of Landers Auto upon the
Company's agreement to implement certain measures at its existing GM and
Chrysler dealerships, respectively, to provide certain additional training to
the employees at such dealerships and to achieve and maintain higher CSI scores.
If such goals are not attained, the Company may be precluded from acquiring,
whether directly from GM or Chrysler or through acquisitions, additional GM or
Chrysler franchises and it may lead GM or Chrysler to conclude that it has a
basis pursuant to which it may seek to terminate or refuse to renew the
Company's existing GM or Chrysler franchises. In addition, Nissan Motor
Corporation U.S.A. ("Nissan") conditioned the Company's acquisitions of the
Nissan franchises held by the Evans Group and United Nissan (TN) upon the
Company's agreeing to grant to Nissan an option to acquire the Evans Group's
Nissan franchise. Moreover, factors outside the Company's control may cause a
manufacturer to reject the Company's application to make acquisitions. See "--
Influence of Automobile Manufacturers."
Capital Requirements
The Company requires substantial capital in order to acquire automobile
dealerships. Such capital might be raised through additional public or private
financings, as well as borrowings and other sources. Other than the Company's
$50 million Senior Credit Facility (which became unavailable in September 1997
in connection with the Company's issuance of its 11% Senior Subordinated Notes
due 2007, Series B, pending an amendment to accommodate such issuance), the
Company does not have any commitments or immediate plans with respect to
acquisition financing. There can be no assurance that additional or sufficient
financing will be available, or, if available, that it will be available on
acceptable terms. Moreover, the Company may be impeded by certain manufacturers
from accessing the public equity markets. See "-- Stock Ownership/Issuance
Limits." If additional funds are raised by issuing equity securities of the
Company, dilution to then existing stockholders may result. In addition, a
decline in the market price of the Common Stock for any reason, including,
without limitation, a perception that sales of substantial amounts of Common
Stock could occur, may increase the amount of cash required by the Company to
finance acquisitions. If adequate funds are not available, the Company may be
required to significantly curtail its acquisition program.
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In addition, the Company is dependent to a significant extent on its
ability to finance the purchase of inventory, which in the automotive retail
industry involves significant sums of money in the form of floor plan financing.
As of September 30, 1997, the Company had $243.0 million of floor plan notes
payable. Substantially all the assets of the Company's dealerships are pledged
to secure such indebtedness, which may impede the Company's ability to borrow
from other sources. The Company currently has floor plan facilities with a
variety of lenders, including primarily Chrysler Financial Corporation and World
Omni Financial Corp. Most of such lenders are associated with manufacturers with
whom the Company has franchise agreements. Consequently, deterioration of the
Company's relationship with a manufacturer could adversely affect its
relationship with the affiliated floor plan lender and vice versa. See "--
Influence of Automobile Manufacturers."
The operations of Atlantic Finance also require substantial borrowings.
See "-- Risks Associated with Automobile Finance Subsidiary -- Capital
Requirements; Interest Rate Fluctuations."
Cyclicality
Unit sales of motor vehicles, particularly new vehicles, historically
have been cyclical, fluctuating with general economic cycles. During economic
downturns, the automotive retailing industry tends to experience similar periods
of decline and recession as the general economy. The Company believes that the
industry is influenced by general economic conditions and particularly by
consumer confidence, the level of personal discretionary spending, interest
rates and credit availability. There can be no assurance that the industry will
not experience sustained periods of decline in vehicle sales in the future, and
that such decline would not have a material adverse effect on the Company.
Competition
The automotive retailing industry is highly competitive with respect to
price, service, location and selection. The Company competes with numerous
automobile dealerships in each of its market segments, many of which are large
and have significant financial and marketing resources. The Company also
competes with private market buyers and sellers of used cars, used car dealers,
other franchised dealers, service center chains and independent shops for
service and repair business. In recent years, automobile dealers have also faced
increased competition in the sale of vehicles from automobile rental agencies,
independent leasing companies and used-car "superstores," some of which employ
sales techniques such as "haggle-free" pricing. Some of these recent market
entrants are capable of operating on smaller gross margins than those on which
the Company is capable of operating because they have lower overhead and sales
costs.
Mature Industry
The automotive retailing industry is a mature industry in which minimal
growth in unit sales of new vehicles is expected. Accordingly, growth in the
Company's revenues and earnings will depend significantly on the Company's
ability to acquire and consolidate profitable dealerships, to grow its
higher-margin businesses and to expand its automobile finance business.
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Dependence on Key Personnel
The Company believes that its success will depend to a significant
extent upon the efforts and abilities of the executive management of the Company
and its subsidiaries. The loss of the services of one or more of these key
employees could have a material adverse effect on the Company. The Company's
business will also be dependent upon its ability to continue to attract and
retain qualified personnel, including key management in connection with future
acquisitions.
Seasonality
The Company's business is seasonal, with a disproportionate amount of
vehicle sales occurring in the second and third fiscal quarters. The dealerships
located in the Northeast are those affected most by seasonality.
Imported Products
Certain motor vehicles retailed by the Company, as well as certain major
components of vehicles retailed by the Company, are of foreign origin.
Accordingly, the Company is subject to the import and export restrictions of
various jurisdictions and is dependent to some extent upon general economic
conditions in and political relations with a number of foreign countries,
including Japan, Germany, South Korea and the United Kingdom.
Risks Associated with Automobile Finance Subsidiary
Capital Requirements; Interest Rate Fluctuations
Atlantic Finance, a wholly owned subsidiary of the Company, requires
substantial borrowings to fund the purchase of retail installment contracts from
automobile dealerships. Consequently, Atlantic Finance's profitability is
affected by the difference, or "spread," between the rate of interest paid on
the funds it borrows and the rate of interest charged on the installment
contracts it purchases, which rate in most states is limited by law. In
addition, since the interest rates at which Atlantic Finance borrows are
variable and the interest rates at which Atlantic Finance purchases the retail
installment contracts are fixed, Atlantic Finance assumes the risk of interest
rate increases prior to the time contracts are sold. There can be no assurance
that Atlantic Finance will be able to extend its present revolving credit
facilities or enter into new warehouse financing facilities on reasonable terms
in the future or that interest rate increases will not adversely affect its
ability to achieve and maintain profitability with respect to the retail
installment contracts it holds.
Dependence on Securitization Transactions
Atlantic Finance relies on a strategy of periodically selling retail
installment receivables on a securitized basis. The securitization proceeds are
utilized to repay borrowings under its revolving credit facilities, thereby
making such facility available to acquire additional retail installment contract
receivables. The terms of any securitization transaction are affected by a
number of factors, some of which are beyond Atlantic Finance's control and any
of which could cause substantial delays. These factors include, among other
things, conditions in the securities markets in general, conditions in the
asset-backed securitization market and approval by all parties to the terms of
the transaction. Gains from the sale of receivables in securitized transactions
generate a significant portion of Atlantic Finance's revenues. If Atlantic
Finance were unable to securitize loans in a given financial reporting period,
Atlantic Finance could incur a significant decline in total revenues and
profitability for such period.
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Credit Risk
Payments by consumers on a number of the retail installment contracts
purchased by Atlantic Finance become delinquent from time to time and some end
up in default. There can be no assurance as to the future credit performance of
Atlantic Finance's customers or that general economic conditions will not worsen
and lead to higher rates of delinquency and default. For example, for the
quarter ended March 31, 1997, Atlantic Finance's annualized default rate was
2.17%, a significant increase over comparable periods. In addition, Atlantic
Finance commenced operations in the first quarter of 1995, and there can be no
assurance that the rates of future delinquency and defaults will be at levels
that will allow Atlantic Finance to achieve and maintain overall profitability.
Regulation
Atlantic Finance is subject to regulation under various federal, state
and local laws and in some jurisdictions is required to be licensed by the state
banking authority. Most states in which Atlantic Finance operates limit the
interest rate, fees and other charges that may be imposed by, or prescribe
certain other terms of, the contracts that Atlantic Finance purchases and
restrict its right to repossess and sell collateral. An adverse change in those
laws or regulations could have a material adverse effect on Atlantic Finance's
profitability by, among other things, limiting the states in which Atlantic
Finance may operate or the interest rate that may be charged on retail
installment contracts or restricting Atlantic Finance's ability to realize the
value of the collateral securing the contracts.
Environmental Matters
The Company is subject to federal, state and local laws, ordinances and
regulations which establish various health and environmental quality standards,
and liability related thereto, and provide penalties for violations of those
standards. Under certain laws and regulations, a current or previous owner or
operator of real property may be liable for the costs of removal and remediation
of hazardous or toxic substances or wastes on, under, in or emanating from such
property. Such laws typically impose liability whether or not the owner or
operator knew of, or was responsible for, the presence of such hazardous or
toxic substances or wastes. Certain laws, ordinances and regulations may impose
liability on an owner or operator of real property where on-site contamination
discharges into waters of the state, including groundwater. Under certain other
laws, generators of hazardous or toxic substances or wastes that send such
substances or wastes to disposal, recycling or treatment facilities may be
liable for remediation of contamination at such facilities. Other laws,
ordinances and regulations govern the generation, handling, storage,
transportation and disposal of hazardous and toxic substances or wastes, the
operation and removal of underground storage tanks, the discharge of pollutants
into surface waters and sewers, emissions of certain potentially harmful
substances into the air and employee health and safety.
Past and present business operations of the Company subject to such
laws, ordinances and regulations include the use, handling and contracting for
recycling or disposal of hazardous or toxic substances or wastes, including
environmentally sensitive materials such as motor oil, waste motor oil and
filters, transmission fluid, antifreeze, refrigerants, waste paint and lacquer
thinner, batteries, solvents, lubricants, degreasing agents, gasoline and diesel
fuels. The Company is subject to other laws, ordinances and regulations as the
result of the past or present existence of underground storage tanks at many of
the Company's properties. In addition, soil and groundwater contamination has
been known to exist at certain properties owned or leased by the Company and
there can be no assurance that other properties have not been contaminated by
any leakage from such tanks or any spillage of hazardous or toxic substances or
wastes.
Certain laws and regulations, including those governing air emissions
and underground storage tanks, have been amended so as to require compliance
with new or more stringent standards as of future dates. The Company cannot
predict what other environmental legislation or regulations will be
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enacted in the future, how existing or future laws or regulations will be
administered or interpreted or what environmental conditions may be found to
exist in the future. Compliance with new or more stringent laws or regulations,
stricter interpretation of existing laws or the future discovery of
environmental conditions may require additional expenditures by the Company,
some of which may be material.
Control by Principal Stockholders
As of September 30, 1997, Trace International Holdings, Inc. ("Trace"),
Aeneas Venture Corporation ("Aeneas"), an affiliate of Harvard Private Capital
Group, Inc., and AIF II, L.P. ("AIF"), an affiliate of Apollo Advisors, L.P.,
owned 22.0%, 15.6% and 10.1% of the outstanding Common Stock, respectively. As a
result, such persons have the ability to control the Company and direct its
affairs and business. Moreover, if the Company elects to use its Class C Common
Stock for future public offerings, which carries one-tenth of the voting power
of the Common Stock, such persons will be able, to a great extent, to retain
such control of the Company. Such concentration of ownership, as well as certain
provisions of the Company's franchise agreements, its Certificate of
Incorporation and the Delaware General Corporation Law (the "DGCL"), could have
the effect of delaying or preventing a change in control of the Company. These
provisions include the stock ownership limits imposed by various manufacturers,
the classified structure of the Company's Board of Directors, the Company's
ability to issue "blank check" preferred stock and the "interested stockholder"
provisions of Section 203 of the DGCL. In addition, such concentration of
ownership and such provisions may adversely affect the ability of stockholders
to realize a premium on the sale of their shares of Common Stock in a takeover
of the Company. See "--Stock Ownership/Issuance Limits."
Trace, Aeneas and AIF have informed the Company that they are
registering their shares pursuant to the registration statement of which this
Prospectus is a part in order to provide themselves with more flexibility in
pursuing their investment strategy, that, provided they are not contractually
prohibited from doing so, they may pledge all or a portion of their shares from
time to time to secure borrowings and that they do not have any present
intention to sell any shares of Common Stock.
Change of Control
Upon the occurrence of a Change of Control under the Indentures
governing the Company's $200 million aggregate principal amount of 11% Senior
Subordinated Notes due 2007 (the "Notes"), each holder of Notes will have the
right to require that the Company repurchase all or a portion of such holder's
Notes at a purchase price in cash in an amount equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
purchase. The Company's three largest stockholders have registered, pursuant to
the registration statement of which this Prospectus is a part, all of their
shares of Common Stock. See "--Control by Principal Stockholders." Were a Change
of Control to occur, there can be no assurance that the Company would have, or
be able to obtain, adequate resources to repurchase all of the Notes. In the
event the Company is unable to repurchase all of the Notes, it would be in
default with respect to such indebtedness and any indebtedness cross-defaulted
with such indebtedness, including the Senior Credit Facility and the Company's
floor plan notes. In addition, it is an event of default under the Senior Credit
Facility if (i) any person or group of persons (other than Trace, Aeneas, AIF
and certain other current stockholders) acquires beneficial ownership of 30% or
more of the Common Stock or (ii) the directors of the Company (or directors
approved by such directors) at the beginning of any 12-month period cease to
constitute a majority of the Board of Directors of the Company at the end of
such period.
A "Change of Control" under the Indentures will be deemed to occur in
the event of (i) the consummation of any transaction after which any person or
group of persons (other than Trace, Aeneas and AIF) beneficially owns at least
(A) 50% of the voting stock of the Company or (B) 40% of such voting stock if
Trace, Aeneas and AIF in the aggregate then own less than such person or group,
(ii)
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the sale, lease or other transfer of all or substantially all of the assets of
the Company, (iii) the consolidation or merger of the Company after which the
persons owning a majority of the voting stock of the Company immediately prior
thereto cease to own a majority of the voting stock of the Company or the
surviving entity, (iv) the failure of the current directors of the Company (or
directors approved by such directors) to constitute a majority of the Board of
Directors of the Company or (v) the approval by the Company's stockholders of a
plan of liquidation or dissolution of the Company.
Holding Company Structure
The Company is a holding company, the principal assets of which are the
shares of the capital stock of its subsidiaries. As a holding company without
independent means of generating operating revenues, the Company depends on
dividends and other payments, including payments of management fees and pursuant
to tax sharing arrangements, from its subsidiaries to fund its obligations and
meet its cash needs. Most subsidiaries of the Company are subject to
restrictions on the payment of dividends pursuant to their franchise agreements
and floor plan agreements. Such restrictions limit the Company's ability to
apply profits generated from one subsidiary for use in other subsidiaries.
Expenses of the Company include salaries of its executive officers, insurance,
professional fees and service of certain indebtedness that may be outstanding
from time to time.
Shares Eligible for Future Sale
As of September 30, 1997, the Company had outstanding 18,258,192 shares
of Common Stock. In addition, as of September 30, 1997, there were outstanding
options to purchase 1,046,375 shares of Common Stock, 336,500 of which are
vested and exercisable and the balance of which will vest over the next five
years. All of the outstanding shares of Common Stock which are not being
registered pursuant to the registration statement of which this Prospectus is a
part are eligible for immediate sale in the public market without restriction,
unless held by affiliates of the Company. Similarly, except for 50,000 shares,
all the shares issuable upon exercise of stock options will be eligible for
immediate sale in the public market without restriction. Any shares held by
affiliates of the Company are eligible for resale in accordance with the
provisions of Rule 144 under the Securities Act. Sales of substantial amounts of
Common Stock, or the perception that such sales could occur, could adversely
affect prevailing market prices of the Common Stock.
Use of Proceeds
The Company will not receive any proceeds from the sale of the Shares.
All proceeds will be received by the Selling Stockholders. See "Selling
Stockholders."
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Selling Stockholders
The following table provides certain information with respect to the
shares of Common Stock beneficially owned by each Selling Stockholder as of
October 31, 1997, and the amount of Shares offered hereunder. Because the
Selling Stockholders may offer some or all of the Shares in an offering which is
not underwritten on a firm commitment basis, no estimate can be given as to the
amount of securities that will be held by the Selling Stockholders after
completion of the sale of the Shares offered hereby. See "Plan Of Distribution."
To the extent required, the specific securities to be sold, the names of the
Selling Stockholders effecting such sale, the names of any agent, dealer or
underwriter participating in such sale, and any applicable commission or
discount with respect to the sale will be set forth in a supplement to this
Prospectus. The nature of the positions, offices or other material relationships
which certain Stockholders have had with the Company or any of its predecessors
or affiliates within the past three years are set forth below or in documents
incorporated herein by reference. The securities offered by means of this
Prospectus may be offered from time to time by the Selling Stockholders named
below:
<TABLE>
<CAPTION>
Shares to be Offered for
Shares Owned Prior to the Selling Stockholder's
Selling Stockholder the Offering(1) Account
- ---------------------------------------- ------------------------- ---------------------------
<S> <C> <C>
Trace International Holdings, Inc.(2) 4,016,110 4,016,110
Marshall S. Cogan (3) 4,147,110 4,016,110
Aeneas Venture Corporation (an 2,843,656 2,843,656
affiliate of Harvard Private Capital
Group, Inc.)
AIF II, L.P. (an affiliate of Apollo 1,843,656 1,843,656
Advisors, L.P.)
The Equitable Life Assurance Society 475,497 233,159
of the United States ("Equitable")(4)
Steve Landers (5) 375,404 375,404
John Landers (6) 300,000 300,000
- ------------------
</TABLE>
(1) Each named person is deemed to be the beneficial owner of securities which
may be acquired within 60 days through the exercise of options, warrants or
other rights, if any.
(2) In addition to other transactions between the Company and Trace disclosed
elsewhere in this Prospectus (including by incorporation by reference), pursuant
to an agreement between United AutoCare and a wholly-owned subsidiary of Trace,
effective as of January 1, 1997, the Company's exposure with respect to United
AutoCare's extended service contracts are assumed by such subsidiary in exchange
for certain fees. As of September 30, 1997, aggregate fees paid under such
agreement totaled approximately $750,000.
(3) Mr. Cogan is the Chairman of the Board, Chief Executive Officer and majority
stockholder of Trace and is included in this table solely by virtue of his
ownership of and positions with Trace, which is itself a Selling Stockholder and
for whose account the shares listed under Shares to be Offered for the Selling
Stockholder's Account will be sold. Mr. Cogan is not registering any securities
for sale for his own account pursuant to the registration statement of which
this Prospectus is part. The amounts
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included in this table under Shares Owned Prior to the Offering include
4,016,110 shares held by Trace, 1,000 shares held by Mr. Cogan's wife and 25,000
shares of Common Stock issuable upon exercise of options granted to Mr. Cogan
under the Company's stock option plan. Mr. Cogan disclaims beneficial ownership
of all shares held by Trace or his wife.
(4) In September 1995, Equitable purchased $15,000,000 aggregate principal
amount of the Company's Senior Notes (with warrants), which Senior Notes were
repaid in full (including a prepayment premium) in October 1996 with proceeds of
the IPO. In October 1996, Equitable exercised such warrants, plus additional
warrants purchased from the Company in July 1996, for an aggregate of 475,497
shares of Common Stock.
(5) Mr. Steve Landers serves as President of Landers Auto Sales, Inc. ("Landers
Auto"), which was acquired by the Company in August 1995, and as a member of the
Chairman's Committee of the Company. In October 1996, he received 375,404 shares
of Common Stock in exchange for 10% of the common stock of Landers Auto.
(6) Mr. John Landers served as Executive Vice President of the Landers Auto
Sales, Inc. until his retirement in April 1997. In October 1996, he received
375,404 shares of Common Stock in exchange for 10% of the common stock of
Landers Auto.
Plan of Distribution
The Shares offered hereby may, upon compliance with applicable "Blue
Sky" law, be sold from time to time to purchasers directly by the Selling
Stockholders or by pledgees, donees, transferees or other successors in
interest, or in negotiated transactions and through the New York Stock Exchange.
The Shares may be sold by one or more of the following: (a) a block trade in
which the broker or dealer so engaged will attempt to sell the Shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; (c) ordinary
brokerage transactions in which the broker solicits purchasers; and (d) directly
to one or more purchasers. In addition, any securities covered by this
Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 rather than pursuant to this Prospectus.
Alternatively, the Selling Stockholders may from time to time offer the
securities offered hereby through underwriters, dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions of
commissions from the Selling Stockholders and/or the purchasers of securities
for whom they may act as agents.
The Selling Stockholders and any underwriters, dealers or agents that
participate in the distribution of securities offered hereby may be deemed to be
underwriters, and any profit on the sale of such securities by them and any
discounts, commissions or concessions received by any such underwriters, dealers
or agents might be deemed to be underwriting discounts and commissions under the
Securities Act. At the time a particular underwritten offer of securities is
made, to the extent required, a supplement to this Prospectus will be
distributed which will set forth the aggregate amount of securities being
offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, and discounts, commissions and other items
constituting compensation from the Selling Stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.
The securities offered hereby may be sold from time to time in one or
more transactions at market prices prevailing at the time of sale, at a fixed
offering price, which may be changed, at varying prices determined at the time
of sale or at negotiated prices.
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<PAGE>
The Selling Stockholders will pay the commissions and discounts of
underwriters, dealers or agents, if any, incurred in connection with the sale of
the Shares. Pursuant to the terms of the Registration Rights Agreements entered
into between the Company and the Selling Stockholders, the Company has agreed to
pay all expenses incident to the offering and sale of the Shares to the public.
The Registration Rights Agreements provide for reciprocal indemnification
between the Company on the one hand, and the Selling Stockholder on the other
hand, against certain liabilities in connection with the Registration Statement,
of which this Prospectus is a part, including liabilities under the Securities
Act.
Legal Matters
Certain legal matters relating to the Shares offered hereby will be
passed upon for the Company by Philip N. Smith, Jr., Senior Vice President and
General Counsel of the Company. Mr. Smith is the beneficial owner of 7,000
shares of Common Stock.
Experts
The consolidated balance sheets as of December 31, 1996 and 1995, and
the consolidated statements of operations, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1996 of the
Company, and the financial statements of Shannon Automotive Ltd., the Staluppi
Automotive Group, Gary Hanna Nissan, Inc. and the Gene Reed Automotive Group,
each of which is as of and for the year ended December 31, 1996, incorporated by
reference in this Registration Statement, have been incorporated herein in
reliance on the reports of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
Available Information
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement," which term shall include all amendments,
exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the
rules and regulations promulgated thereunder, covering the shares of Common
Stock being offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements made in
this Prospectus as to the contents of any contract, agreement or other document
referred to in the Registration Statement are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
The Company is subject to the informational reporting requirements of
the Exchange Act and, in accordance therewith, files reports, proxy statements
and other information with the Commission. Such reports, proxy statements and
other information can be inspected and copied at the public reference facilities
of the Commission at Room 1024, 450 Fifth Street, N.W., Washington D.C. 20549
and at the regional offices of the Commission located at 7 World Trade Center,
13th Floor, Suite 1300, New York, New York 10048 and Suite 1400, Citicorp
Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies of
such material can also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Such material may also be accessed electronically by means of the
Commission's Web site (http://www.sec.gov.). The Common Stock is listed on the
New York Stock Exchange, Inc. at which such material may be inspected.
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The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus is delivered, upon the written or oral request
of such person, a copy of any and all documents incorporated by reference
herein. See "Incorporation of Certain Documents by Reference." Such requests
should be addressed to United Auto Group, Inc., 375 Park Avenue, New York, New
York 10152, Attention: Secretary. The Company's Secretary may also be reached at
(212) 230-0400.
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