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DriveTime Terminates Santander Agreement

November 19, 2012

PHOENIX, Ariz. — DriveTime Automotive Group announced this week that it has terminated its sale agreement with Santander Consumer USA and other investors, according to its filing with the Securities & Exchange Commission (SEC).  In the Nov. 14 8-K filing, DriveTime stated the reason for termination was “due to certain unsatisfied conditions on the closings of the transactions.”

The news comes almost two months after DriveTime announced it would sell the company in separate transactions — its financial receivable portfolio to Santander, and secured senior notes to other third-party investors.

The Sept. 14 filing laid out that each party was entitled to certain termination rights, “including in the event of a failure by the purchasers to secure certain third-party financing necessary to consummate the transaction, and further provide that upon termination of the purchase agreements under certain circumstances, each party may be obligated to pay the other party a termination fee of $25 million (subject to adjustment as provided in the definitive agreements).”

With its termination of the contract, DriveTime did not state the financial impact. The company expressed that it engaged in good faith discussions regarding potential alternative transactions or transaction structures, but an agreement could not been reached.

In a related document filed on Sept. 24, DriveTime included terms for an outstanding 12.625 percent of senior secured notes, which also will not be consummated, as indicated in the company’s SEC filing.

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