Company Identifies $3 Billion Portfolio for Potential Sale
SAN FRANCISCO, Nov. 14 /PRNewswire/ -- Providian Financial Corporation
(NYSE: PVN) today announced that it has received a commitment for a new
securitization from Salomon Smith Barney and Goldman, Sachs & Co., and that it
is pursuing the possible sale of $3 billion in higher-risk credit card
receivables.
The company said that Salomon Smith Barney and Goldman, Sachs & Co. have
committed to securitize at least $900 million in credit card receivables for
Providian. A portion of the financing would replace funding provided by a
private securitization conduit (Series 1998-1 of the Providian Master Trust),
which recently began early amortization as a result of credit rating
downgrades at Providian. The company said that the securitization is expected
to be completed by year-end 2001, subject to customary conditions. The
company confirmed that none of its existing securitizations have credit
downgrade provisions that would trigger early amortization.
Providian also announced that it is working with its investment bankers to
develop a structure for a possible sale of a portfolio of approximately
$3 billion of higher-risk credit card receivables. The Company originated the
majority of these assets through marketing programs it has since discontinued.
These steps comprise the first results of a broad strategic review now
underway at Providian focused on rebuilding shareholder value. In close
consultation with its investment bankers, the company is also considering
further courses of action that may include additional business divestitures
and asset sales, and other strategic business transactions. The company has
recently begun implementing steps designed to address under-performing areas,
to focus the business on those market segments with the highest expected
risk-adjusted returns, to reduce expenses, and to manage its capital,
reserves, and liquidity. In a separate release, Providian today announced
that it will close its Henderson, Nevada facility. The Company estimates that
it will realize approximately $18 million in annual operating expense savings
as a result of this closure, and stated that it plans to take a one-time
charge of approximately $12 million in the fourth quarter of 2001 to reflect
associated costs.
In a related development, the company announced that its Board of
Directors has suspended for an indefinite period the payment of quarterly cash
dividends on the company's common stock, and withdrawn previously issued
earnings guidance for the fourth quarter of 2001 and the year 2002. The Board
made these decisions in light of both the steps the company is taking to
implement its action plan, and uncertainty regarding how these steps,
potential steps to come, and economic trends facing the company may affect
earnings. The company further indicated that it will file its quarterly 10-Q
report later today, and will file on November 15 an 8-K report detailing its
managed loss and delinquency data for October. These reports will be
accessible through Providian's web site at http://www.providian.com.
Providian's Board of Directors is continuing its search for a new
Chief Executive Officer of the company. Shailesh J. Mehta continues to serve
as President and CEO of Providian pending the selection of a successor.
San Francisco-based Providian Financial is a leading provider of credit
cards and deposit products to customers throughout the U.S., and also offers
credit cards and deposit products in the UK and in Argentina. The company has
more than $32 billion in managed receivables and more than 18 million customer
accounts.
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:
Konrad Alt of Providian Financial
Corporation, +1-415-278-6723
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