Sale Adds Over $1.2 Billion in Liquidity
SAN FRANCISCO, June 25 /PRNewswire-FirstCall/ --
Providian Financial Corporation (NYSE: PVN) announced today that it has
completed the structured sale, through a limited liability subsidiary of
Providian National Bank, of its higher risk portfolio in a transaction
developed in conjunction with two limited liability companies formed by
affiliates of Goldman, Sachs & Co., Salomon Smith Barney, Cardworks, Inc., and
CompuCredit Corporation. Credit card receivables in the portfolio totaled
approximately $2.4 billion at the time of sale, down from $2.6 billion at
March 31, 2002, as a result of interim attrition. Under the completed
structure, the limited liability company subsidiary of Providian National Bank
holds approximately $87 million, or 49%, of the BB-/Ba2 rated notes, and
approximately $98 million, or 44%, of the BBB-/Baa2 rated certificates, issued
in conjunction with the securitization of the portfolio. These investments
will be treated as "available for sale" on the Company's consolidated balance
sheet.
Total cash proceeds to Providian National Bank were approximately
$1.2 billion. The Company previously recognized a $240 million after-tax loss
on the portfolio in the first quarter when it transferred the loans to
"available for sale or securitization" and expects to recognize an estimated
$6 million after-tax loss in the second quarter, reflecting a reduction in the
carrying value of the receivables for the period from March 31, 2002 to the
closing date of the transaction.
"Late last year, this Company set out on a very ambitious plan to
restructure its balance sheet. With the closing of this transaction we have
completed the last asset disposition that was part of that plan," said
Joseph Saunders, Providian's Chief Executive Officer. "With this sale, the
Company has improved its credit risk profile and further strengthened its
liquidity position. Now we can focus our full attention on managing our
existing portfolio, marketing to new customers, improving the efficiency of
our operations, and reducing our costs."
The transaction involved approximately 1.3 million accounts. Under the
terms of the transaction, Providian will act as interim subservicer for the
portfolio for up to twelve months and will continue to serve as the owner of
the related credit card accounts for up to eighteen months.
Since first embarking on its balance sheet restructuring efforts in late
2001, the Company has sold close to $12 billion in managed receivables
generating over $4.5 billion in liquidity.
San Francisco-based Providian Financial is a leading provider of lending
and deposit products to customers throughout the United States. The Company
has $20 billion in managed receivables and more than 13 million customers.
Certain statements contained in this press release are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
and are subject to the "safe harbor" created by those sections.
Forward-looking statements include expressions of "belief," "anticipation," or
"expectations" of management, statements as to industry trends or future
results of operations of the Company, and other statements that are not
historical fact. Forward-looking statements are based on certain assumptions
by management and are subject to risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. These risks and uncertainties include, but are not limited to:
competitive pressures; factors that affect delinquency rates, credit loss
rates, liquidity 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, whether of general applicability or specific
to the Company, including restrictions and/or limitations on the Company's
minimum capital requirements, deposit taking abilities, reserve methodologies,
dividend policies and payments, growth, and/or underwriting criteria; year-end
audit adjustments; changes in accounting rules, policies, practices and/or
procedures; product development; legal and regulatory proceedings, including
the impact of ongoing litigation; 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. These and other risks and uncertainties are described
in detail in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2001 under the heading "Cautionary Statements" and "Risk
Factors." Readers are cautioned not to place undue reliance on any
forward-looking statement, which speaks only as of the date thereof. The
Company undertakes no obligation to update any forward-looking statements.
NOTE: Investor information is available on Providian Financial's web site
at http://www.providian.com.
SOURCE Providian Financial Corporation
 back to top
Related links:
http://www.providian.com
CONTACT:
investors, Jack Carsky, +1-415-278-4977, or
Bill Horning, +1-415-278-4602, or media, Alan Elias,
+1-415-278-4189, or Laurel Munson, +1-415-278-4770, all for
Providian Financial Corporation
|
