Implementation of Strategic Plan Continues
SAN FRANCISCO, Jan. 17 /PRNewswire-FirstCall/ -- Providian Financial
Corporation (NYSE: PVN) today provided an update on recent funding initiatives
intended to bolster the Company's liquidity.
"Providian has been focused on implementing its five-point strategic
action plan to restore investor confidence and rebuild shareholder value,"
said Joe Saunders, president and chief executive officer. "Strengthening our
liquidity is a key element of that plan, and I am encouraged by our progress
to date. We have a lot of work still ahead of us, but we know what we need to
do, and we are committed to getting it done and moving the company forward."
Over the past four weeks the Company has completed securitization
transactions totaling $2.825 billion that replace maturing or amortizing
transactions that total $1.975 billion. The deals include the completion of a
$900 million securitization program with Goldman, Sachs & Co. and Salomon
Smith Barney. In anticipation of the sale of the Providian Master Trust, the
Company drew only $675 million in funding under this program and has reduced
the program's size to $675 million. The Company expects the program to be
repaid upon consummation of the Master Trust sale.
In addition to the transaction with Goldman, Sachs and Salomon Smith
Barney, the Company has completed two further securitizations, one in the
amount of $1.15 billion and the other in the amount of $1 billion. JP Morgan
Securities Inc. and Deutsche Banc Alex Brown acted as co-structuring agents on
both transactions, with participation from Barclays Capital and Credit Suisse
First Boston.
Providian has used proceeds of the new securitizations both to provide
incremental liquidity and to renew or replace a number of funding structures.
In particular, the Company has used portions of the proceeds to:
-- Replace $625 million in funding provided by private securitization
conduits (Series 1998-1 of the Providian Master Trust). Providian
announced on November 14 that this transaction began early amortization
as a result of credit rating downgrades of Providian National Bank.
-- Renew and increase a private securitization program (Series 2000-D of
the Providian Gateway Master Trust). The program was increased from
$700 million to $1.15 billion.
-- Retire approximately $650 million of asset-backed certificates of
beneficial interest (COBIs) issued under the Providian Master Trust
Series 1993-3, a commercial paper like program.
In conjunction with the $1.15 billion and $1 billion transactions, the
Company cancelled a syndicated line of credit totaling $750 million to its two
banks and four $250 million lines of credit to Providian Financial Corp. The
credit facilities, which had maturities ranging from early 2002 to early 2003,
had not been drawn on for several years. A GBP50 million credit line
available for the United Kingdom branch of Providian National Bank was also
terminated following repayment of loans outstanding under the line.
"We said we would work to strengthen liquidity and we have been doing
that. While there is still much to be done, we are determined to rebuild our
business and restore shareholder value," added Mr. Saunders.
San Francisco-based Providian Financial is a leading provider of credit
cards and deposit products to customers throughout the U.S.
This release contains forward-looking statements as to the Company's
expectations, intentions and goals that are subject to the "safe harbor"
provisions created by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include expressions of "belief," "expectations,"
"intentions" and other words of similar import, statements as to industry and
economic trends, and other statements that are not historical facts. Such
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements. Among the significant risks and uncertainties
are: competitive pressures; factors that affect delinquency rates, credit loss
rates and charge-off rates; general economic conditions; consumer loan
portfolio growth; changes in the cost and/or availability of funding due to
changes in the deposit, credit or securitization markets, changes in the way
in which the Company is perceived in such markets, and/or conditions relating
to existing or future financing commitments; the effects of government policy
and regulation, including restrictions and/or limitations on the Company's
minimum capital requirements, deposit taking abilities, growth, accounting
policies, and/or underwriting criteria; product development; legal and
regulatory proceedings; interest rates; acquisitions; one-time charges;
extraordinary items; the ability to attract and retain key personnel; the
impact of existing, modified or new strategic initiatives; and international
factors. Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to update any forward-looking statements. More information on
risks and uncertainties relating to the Company are available in the Company's
filings with the Securities and Exchange Commission, including its annual
report on Form 10-K, quarterly reports on Form 10-Q, and current reports on
Form 8-K.
SOURCE Providian Financial Corporation
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Related links:
http://www.providian.com
CONTACT:
press, Alan Elias, +1-415-278-4189, or
investors, Jack Carsky, +1-415-278-4977, or Bill Horning,
+1-415-278-4602, all of Providian Financial Corporation
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