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.