Win Agrees to Buy Rental Car Firm in Stock Deal
Win Corp., a recently formed Costa Mesa investment firm, said Thursday that it has agreed to buy one of the largest independent car rental companies in California in a stock deal that will transform the rental firm into a public company.
But under the terms of the tentative agreement, the owners of Avon Rent-A-Car and Truck Corp. in Los Angeles would hold most of the stock of the combined company, with Win’s current shareholders retaining only a 5% stake.
The reverse acquisition would give Avon an opportunity to raise investor funds through future stock sales or use its stock to acquire other car rental companies, said Stuart N. Silver, Avon’s president.
Specialty in Exotic Cars
Avon specializes in renting exotic cars like Rolls-Royces, Porsche Carreras, Lamborghinis and Maseratis. Its top-of-the-line Lamborghini Countach rents for $760 a day and is in constant demand, said Rowland Day, a Costa Mesa attorney for Win.
Avon, a privately held company, and its subsidiaries earned $2 million on revenue of $14 million in the fiscal year ended September, 1987. In the first 11 months this year, it has earned $2.6 million on $18 million in revenue.
Its biggest problem in recent years has not been a need for cash but the removal of its $1 license plate frames, which carry the company’s name. At one point last year, customers were ripping off--sometimes literally--400 frames a month to make it look as if they owned the rental cars, company officials said.
The acquisition by Win will allow Avon to become a publicly traded firm without paying the substantial fees associated with typical initial public offerings, said one of Day’s associates, Jehu Hand.
Win, financed initially by two Orange County businessmen, is a blind pool that now has more than 500 investors from Colorado and New York, states where public offerings of blind pools are allowed. California law prohibits such offerings, though the firms can be based in the state.
A blind pool is an investment firm that raises funds through a public stock offering without specifying how it will invest the funds it raises. Investors basically trust the reputations and instincts of the firm’s managers to make good investments.
Win raised about $176,000 by selling 21.3 million shares in its initial offering. Under the terms of the tentative agreement with Avon, Win would issue an additional 404.7 million shares to Avon’s current owners.
After the closing, scheduled for Wednesday morning, Win will change its name to Avon and Win’s two director-officers will resign, leaving Silver in charge, Avon’s president said. Avon already has applied to list its stock on the American Stock Exchange and expects trading there to begin within two months, Silver said.
The price of Win stock in over-the-counter trading, he said, has increased to 18 cents a share from a start of 2 cents a share.
Win’s chairman is Rolf Winterfelt, a Santa Ana business consultant, and its president is Richard G. Dunham, an Irvine tax accountant. Together, they own 56% of the company. They could not be reached for comment.