'Funny Business' at AutoTrader.com Threatens Another IPO

June 19, 2012 2:22 PM EDT
According to an SEC filing on Friday, AutoTrader.com (NASDAQ: ATG) will seek to raise $300 million in the first US IPO since May's Facebook (NASDAQ: FB) fiasco. But the deal is already coming under scrutiny.

Dan Primack of Fortune Magazine pointed out a peculiarity with a recent dividend payout at Autotrader.com. Apparently, six weeks ago AutoTrader insiders borrowed $400 million. Soon after, they turned around and pay themselves a one-time dividend of, surprise, $400 million.

According to reports, the transaction increased AutoTrader's long-term debt by 50 percent, and was paid out to pre-IPO shareholders including Cox Enterprises and two private equity investors, Providence Equity Partners and Kleiner, Perkins.

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