AutoTrader.com IPO Appears Troubled

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n a move described by one well-known finance blogger as "scummy," Autotrader.com insiders appear to have borrowed $400 million only to pay themselves a dividend in the same amount. The reason that the transaction--which is not illegal, apparently--is described as such is that new federal filings indicate that Autotrader.com is getting ready for an IPO.

The move now increases the company's long-term debt load and makes it appear as if insiders don't believe the IPO will be successful.

The move now increases the company's long-term debt load and makes it appear as if insiders don't believe the IPO will be successful.

Autotrader.com won't comment because it's in the so-called "quiet period" leading up to an IPO, which doesn't help the perception that something shady is going on.

This may turn out to be much ado about nothing, but Autotrader.com has become a pretty big player in the automotive-sales industry, so we'll all be watching closely.

[Source: Yahoo! Finance/Breakout]