News

Several companies interested in CCC assets

An attorney representing the Unsecured Creditors Committee in the CCC bankruptcy case says that four companies have submitted bids to buy all or part of the ISO's assets.

December 19, 2001

While no one seems sure exactly what remains of the Credit Card Center ATM portfolio, that hasn't stopped several prospective buyers from announcing their intent to purchase at least part of it.

Four companies have submitted letters of intent to purchase all or part of CCC's assets, according to Kitt Turner, an attorney with Eckert Seamans Cherin & Mellott, LLC, the Pittsburgh-based firm representing the Unsecured Creditors Committee in the Chapter 11 bankruptcy case.

At an Aug. 8 hearing, CCC expressed its desire to move forward with the first bidder, XtraCash ATM of San Diego. XtraCash, which is owned by Amicus Financial, is primarily interested in the ATM locations under CCC contract. "They're seeking the exclusive right to offer arrangements to those merchants," Turner said.

CCCclaimed to have up to 15,000 ATMs under contract before it filed for Chapter 11 protection in Pennsylvania's Eastern District Bankruptcy Court on June 6. A class-action complaint filed on behalf of two merchants in Philadelphia on May 25 indicated that attorneys believed CCC had at least 11,000 machines under contract.

Yet some in the industry are not convinced that CCC, which filed financial schedules with the bankruptcy court indicating total assets of $57 million and total liabilities of $78 million, ever had that many ATMs.

"They're like a lot of other ISOs. They counted every machine they ever put out there," said the sales director of a large ISO in the Western half of the U.S., explaining that it's not uncommon for ISOs to exaggerate the number of ATMs in their networks.

It is also widely believed that several thousand customers switched their processing to other ISOs after CCC began experiencing serious financial problems in late 2000. Ken Paull, vice president of sales and marketing for Lynk Systems, an Atlanta-based processor that works with many ISOs, called the pursuit of CCC business "a feeding frenzy," noting that Lynk picked up many former CCC accounts shortly after the first of the year. Many ISOs gained accounts by hiring former CCC sales reps who brought customer lists with them, Paull said.

A source close to the case indicated that CCC believes it has approximately 5,000 ATMs remaining under contract.

Despite the question of how many ATM locations remain under CCC contract,Turner said thatoffers were also submitted by TRM Corporation and E*Trade ATM, both based in Portland, Ore.

As reported earlier on ATMmarketplace.com, merchants who leased machines through QL Capital or Preferred Leasing Corp. had already received offers from E*Trade ATM, made via their leasing companies. Under those offers, E*Trade would assume management of the machines and provide "special compensation" to merchants in the first year of their contracts based on their average number of monthly surcharged transactions.

When asked if E*Trade ATM had submitted an offer to the bankruptcy court, E*Trade ATM Marketing Director Saul Caprio said, "As have other companies, we have had conversations with the bankruptcy court concerning the dispensation of CCC."

Neither XtraCash nor TRM Corporation commented on whether offers had been submitted, citing confidentiality agreements.

Turner did not identify the fourth bidder because she had not yet seen the proposal. "It's my understanding that they have submitted an offer, but I haven't seen it yet," she said, noting that the company in question is not an ISO but "is in an ATM-related industry."

Turner said the XtraCash offer is "the bid in play" because it was selected by CCC and its attorneys. TRM, E*Trade ATM and any other interested bidders must submit formal proposals before the Aug. 22 deadline using the XtraCash offer as a reference and making modifications to it, she said.

The XtraCash proposal included a provision that "some of the money would go directly to the merchants," Turner said, without specifying exactly how those funds would be distributed.

Turner's firm and some of the other attorneys representing creditors are currently contacting other companies they believe might be interested in purchasing CCC's assets, she said. "We want anybody out there with a reasonable proposal to be able to make it."

Turner said that bids may be made on the entire CCC estate or just on selected assets, as was the case with XtraCash. TRM's offer was "somewhat more inclusive" than the XtraCash proposal, Turner said, without specifying which items were included.

All bidders will have to "provide some evidence of their financial ability to perform according to the court-approved bidding parameters," she said. Bids must specify which assets the bidder is interested in purchasing and how much they will pay.

A hearing scheduled for Aug. 24 "will attempt to decide the best overall solution for the estate," Turner said. While noting that this will likely be a tough task since all of CCC's creditors have their own agendas, Turner said many of the attorneys are already comparing the offers submitted to date and negotiating with each other.

"The consequences of disagreeing are so awful that the parties are forced to find common ground," she said.