National Auto Credit, Inc. has announced that it has settled all outstanding litigation with Samuel J. Frankino and has agreed to repurchase all of the Company securities held by Frankino and certain of his related parties.
Disputes had arisen between Frankino and the company, which resulted in litigation, National Auto Credit, Inc. v. Sam J. Frankino, C.A. No. 17973 and Sam J. Frankino v. David L. Huber, et al., C.A. No. 17984, both pending in the Court of Chancery of the State of Delaware. Pursuant to the settlement reached on Nov. 3, among other things, the litigation has been dismissed, and the company has agreed to repurchase from Frankino and related parties 15,863,360 Company common shares for an aggregate purchase price of $35,520,522.
In addition, Frankino and his related parties have agreed to standstill and related restrictions regarding their future involvement with the company. The company also agreed to reimburse Frankino for some expenses incurred in company-related legal matters.
In connection with the settlement, Frankino and four other company directors, Robert Upton, William Dodero, Lorraine Dodero and William Maund, resigned from the company's board of directors.
The company simultaneously repurchased from Reading Entertainment, Inc. and affiliates 5,277,879 of the 10,055,000 company common shares owned by Reading and all 100 of the Company's preferred shares owned by Reading for an aggregate purchase price of $8,468,770. Pursuant to the terms of the agreement, Reading and the company have agreed to certain standstill restrictions, voting arrangements, corporate governance and related matters.
As a result of these two stock repurchases, there are 13,611,723 company common shares outstanding. The repurchase and expense reimbursements will result in a significant charge against the company's operating results for the quarter ending Jan. 31, 2001.
In connection with these transactions, James Cotter, Scott Braley, John Gleason and William Marshall joined the company's board of directors. James McNamara was named interim Chairman of the Board and CEO.
"These transactions mark the end of an arduous and troubled era for the company," McNamara said. "With these events behind us, we now can focus our attention and resources on the opportunities before us to restore investor confidence and enhance stockholder value."
