June 5, 2009
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News: Advanta Signs Contract With AmEx
Advanta Corp, once a primary source for small business credit cards, continues to be plague with financial issues. The Spring House, Pennsylvania-based company announced this week they were not able to meet a regulatory condition on their repurchase offer of $1.4 billion of debt, and therefore, have terminated the offer. Advanta, who shut down all new credit card use as of the end of May, had hoped the offer would assist them in maximizing capital and reducing future risks of rising loan and card defaults. Meanwhile, the company announced they have reached an agreement with American Express Travel Related Services Co. Inc to offer a portion of Advanta's more than one million business card accounts a new American Express (AmEx) account. Additionally, Advanta says they are working with other major credit card issuers to make additional offers for other accounts in good standing.
Advanta said they would be in contact with some of the selected customers while American Express would also be sending personal invitations to some accounts notifying them of the offer and asking them to apply for the new American Express credit card. It will be an exclusive offer extended to a limited number of select Advanta accounts. Customers will be given an expiration date of between 60 days and a year. The agreement pays Advanta a referral bonus for each account opened by American Express. The organization has not released the names of the other credit card lenders or an expected time of agreement.
Despite the termination of the business credit card trust buy, Advanta says it will continue its pursuit of the $100 million of preferred securities cash offer. The company will have to go back to the drawing board since it will not be able to fulfill all the components of its plan. They expect to be meeting with regulators in the near future to discuss its operations.