Magna Carta News
Friday, September 12, 2003
Reuters
Thursday September 11, 5:49 pm ET
By Tom Johnson
NEW YORK, Sept 11 (Reuters) - Electronics retailer Circuit City Stores Inc. (NYSE:CC - News) has received multiple bids to acquire part of its beleaguered bank-affiliated card portfolio and could wrap up a deal in a matter of weeks, sources familiar with the situation said on Thursday.
The bidders include two buyers of distressed credit card assets, as well as a handful of commercial banks and investing arms controlled by Wall Street investment banks, sources said.
The robust auction has also raised price expectations for the $1.5 billion portfolio, sources said. The company originally projected it would clear $190 million in cash from the transaction, but that figure may now climb given the interest in the auction, sources said.
The company is hoping to announce a deal by the end of this month, according to sources. A Circuit City spokeswoman declined to comment on the auction process.
Among the bidders are CompuCredit Corp. (NasdaqNM:CCRT - News) and CardWorks LP, which both have a history of buying distressed credit card portfolios, sources said.
CompuCredit has been an active buyer of credit card assets of late, purchasing $859 million in receivables from Providian Financial Corp. along with Merrill Lynch (NYSE:MER - News) and buying $1.2 billion worth of Fingerhut receivables from Federated Department Stores Inc.
CardWorks, meanwhile, signed an agreement in May to service Spiegel Inc.'s $2 billion private-label credit card portfolio. CompuCredit and CardWorks both declined to comment.
Several banks and funds controlled by investment banks also submitted bids, sources said, though the exact names could not immediately be learned.
But investment banks have delved into distressed credit cards before. Goldman Sachs (NYSE:GS - News) and Citigroup (NYSE:C - News), for instance, participated in the buyout of Providian assets along with CompuCredit and CardWorks last year.
The Richmond, Virginia-based home electronics retailer announced in August it had hired Banc of America Securities (News - Websites) to find buyers for the troubled bank card portfolio, which has been hurt by rising customer default rates.
The company intends to take an up to $200 million, or 96 cents per share, charge to exit the business, primarily during its second quarter, which ended on August 31.
Circuit City also owns a private label portfolio of about the same size but has decided for now to retain that business and just sell the bank card unit, which comprises of cards that do not don the company's name or brand.
That tempered interest from certain potential buyers like GE Capital that might have been more interested in the entire portfolio, sources said.
The company intends to reinvest the proceeds from the sale back into its retail operations, which have been struggling to keep pace with rival Best Buy Co. (NYSE:BBY - News).
Circuit City credit card auction draws a crowd
Thursday September 11, 5:49 pm ET
By Tom Johnson
NEW YORK, Sept 11 (Reuters) - Electronics retailer Circuit City Stores Inc. (NYSE:CC - News) has received multiple bids to acquire part of its beleaguered bank-affiliated card portfolio and could wrap up a deal in a matter of weeks, sources familiar with the situation said on Thursday.
The bidders include two buyers of distressed credit card assets, as well as a handful of commercial banks and investing arms controlled by Wall Street investment banks, sources said.
The robust auction has also raised price expectations for the $1.5 billion portfolio, sources said. The company originally projected it would clear $190 million in cash from the transaction, but that figure may now climb given the interest in the auction, sources said.
The company is hoping to announce a deal by the end of this month, according to sources. A Circuit City spokeswoman declined to comment on the auction process.
Among the bidders are CompuCredit Corp. (NasdaqNM:CCRT - News) and CardWorks LP, which both have a history of buying distressed credit card portfolios, sources said.
CompuCredit has been an active buyer of credit card assets of late, purchasing $859 million in receivables from Providian Financial Corp. along with Merrill Lynch (NYSE:MER - News) and buying $1.2 billion worth of Fingerhut receivables from Federated Department Stores Inc.
CardWorks, meanwhile, signed an agreement in May to service Spiegel Inc.'s $2 billion private-label credit card portfolio. CompuCredit and CardWorks both declined to comment.
Several banks and funds controlled by investment banks also submitted bids, sources said, though the exact names could not immediately be learned.
But investment banks have delved into distressed credit cards before. Goldman Sachs (NYSE:GS - News) and Citigroup (NYSE:C - News), for instance, participated in the buyout of Providian assets along with CompuCredit and CardWorks last year.
The Richmond, Virginia-based home electronics retailer announced in August it had hired Banc of America Securities (News - Websites) to find buyers for the troubled bank card portfolio, which has been hurt by rising customer default rates.
The company intends to take an up to $200 million, or 96 cents per share, charge to exit the business, primarily during its second quarter, which ended on August 31.
Circuit City also owns a private label portfolio of about the same size but has decided for now to retain that business and just sell the bank card unit, which comprises of cards that do not don the company's name or brand.
That tempered interest from certain potential buyers like GE Capital that might have been more interested in the entire portfolio, sources said.
The company intends to reinvest the proceeds from the sale back into its retail operations, which have been struggling to keep pace with rival Best Buy Co. (NYSE:BBY - News).
