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UICI Completes Sale of United Credit National Bank09/29/2000ConsumerAffairs
UICI Completes Sale of United Credit National Bank...
DALLAS, Sept. 29, 2000 -- /PRNewswire/ -- UICI (NYSE: UCI) (the "Company") today announced that it has completed its previously announced sale of substantially all of the non-cash assets associated with its United CreditServ credit card business, including its credit card receivables portfolios and its Sioux Falls, South Dakota servicing operations, for a cash sales price of approximately $124.0 million.
While the sales price was less than originally projected, the shortfall was offset by higher than projected cash collections on credit card receivables made through the closing of the sale. In addition to the cash sales price received at closing, the transaction contemplates an incentive cash payment contingent upon the post-closing performance of the ACE credit card portfolio over a one-year period. UICI continues to hold United CreditServ's building and real estate in Sioux Falls, South Dakota, and has leased the facilities to the purchaser pursuant to a long-term lease. UICI has also retained the right to collect approximately $250 million face amount of previously written off credit card receivables.
In connection with the sale, UICI or certain of its subsidiaries have retained substantially all liabilities associated with its credit card business, including liability for payment of all certificates of deposit issued by United Credit National Bank (an indirect wholly-owned subsidiary of UICI), merchant holdback liabilities, liabilities associated with pending litigation and other contingencies. Following the sale, United Credit National Bank holds approximately $96.0 million in available cash, cash equivalents and short term U.S. Treasury securities and has approximately $79.0 million of certificates of deposits outstanding. United Credit National Bank has initiated a program to prepay all of its outstanding certificates of deposit and currently expects to discharge all such deposit liabilities on or before October 31, 2000. United Credit National Bank is in the process of preparing a formal voluntary plan of liquidation to be filed with and approved by the Office of the Comptroller of the Currency, and UICI currently anticipates that the voluntary liquidation of United Credit National Bank, including the provision for all remaining liabilities and distribution to UICI of all residual cash, will be complete on or before year-end.
"We are very pleased to have successfully completed this critical step in UICI's orderly withdrawal from the credit card business," commented Gregory T. Mutz, UICI's chief executive officer. "We look forward to formally closing United Credit National Bank by year-end and turning our full attention once again to the core businesses that have served our shareholders so well in the past."
Separately, UICI has learned that the plaintiffs in previously disclosed litigation have filed motions to compel UICI to, among other things, deposit a significant portion of the proceeds of the sale of UICI's credit card business in escrow under court supervision. UICI believes that the motions are wholly without merit and intends to oppose them vigorously.
The operators of an X-rated Web site have been ordered to pay $37.5 million dollars for fraudulently billing credit cards of consumers who had never even v...
New Travel Site Hopes to Hotwire Priceline09/08/2000ConsumerAffairs
New Travel Site Hopes to Hotwire Priceline...
WASHINGTON, Sept. 8, 2000 -- The Priceline niche got a little more crowded this week. A new deep-discount service, Hotwire, taxied out onto the Web while another, Orbitz delayed its pushback from the gate.
Like Priceline, Hotwire sells airlines' unsold inventory -- seats on unpopular route segments that would probably fly empty otherwise. But, like Priceline, Hotwire's procedure contains pitfalls for the unwary:
- Travelers don't learn which airline they'll be flying on until after they agree to purchase the ticket.
- Even worse, travelers don't know
- Tickets are non-refundable and may not be exchanged or returned. Itineraries, needless to say, can't be changed.
- Frequent flyer miles don't apply.
- There may be landing fees and taxes that may (or may not) be higher than the airlines charge regular travelers.
- whenthey'll be flying until after they agree to purchase the ticket.
We tested the system by asking for a round-trip between Washington Dulles and New York LaGuardia, departing on Monday, Sept. 11 and returning Tuesday, Sept. 12. Hotwire offered us a ticket for $298, which didn't seem too bad for this route. But with no information on airline or times or the exact routing (we had visions of a connection in Cleveland), we couldn't bring ourselves to press the "buy" button.
Good thing, too. We surfed over to US Airways and found a $189 round-trip leaving for New York at 6:50 a.m. and returning the next day at 11 a.m. -- exactly the times we wanted and $109 cheaper than Hotwire's mystery airline.
Orbitz was suppposed to launch this fall but its new CEO, Jeffrey Katz, pushed the date back to next June, saying he wants to be sure the site offers a high level of customer service. Orbitz is owned by United, Delta, Northwest, Continental and American Airlines.
It's thought that Orbitz will target giants Travelocity and Expedia rather than Priceline and other bargain-hunter sites. But like its founders, Orbitz may have a hard time meeting its schedule. The Justice Department has launched an antitrust investigation after complaints from travel agents who say the airlines are forming a cartel that will give them a "stranglehold" on the travel business.