Inc.ubator Capital Inc. announced that eCard Solutions Inc., an Inc.ubator portfolio company, completed an investment in Junum.com, a financial services technology company.
eCard received $5.1 million in convertible preferred stock in consideration for the contribution of a portfolio of $352 million of non-performing consumer loans previously purchased at a discount, described below.
In February of 2000, Inc.ubator acquired Series A Convertible Preferred Stock in eCard Solutions (f/k/a Brunswick Capital Partners) from Thesseus International Asset Fund in exchange for 2 million restricted common shares. The preferred stock held by Inc.ubator in eCard entitles Inc.ubator to convert its holdings at its option into 40 percent of eCard common shares.
The Junum preferred stock now held by eCard is convertible into no less than 5.1 million Junum common shares. As described above, Inc.ubator has a $6.1 million preferred interest in the assets of eCard, or 40 percent of the company if converted. eCard’s primary material asset is now the Junum convertible preferred stock described herein, which, if converted to common stock, would represent a significant gain based on the current trading price of Junum common shares. There are certain performance representations made in connection with the portfolio and a 24 month restriction. If certain customer acquisition targets are not met, Junum has the right to redeem substantially all of the preferred stock after 24 months, which would materially affect the economic benefit to eCard and its shareholder, Inc.ubator.
“We are pleased to have a relationship with dynamic innovators such as Junum and are excited to see them offering new credit facilities to customers in the portfolio, including a new unsecured credit card,” said Harry Weitzel, chairman of Inc.ubator. “We are equally pleased that the Junum.com range of membership services fulfills virtually all product and technology development objectives that Inc.ubator sought to accomplish with its CASA investment, as described in our past SEC filings.”
CASA is a distinct investment from eCard made by Inc.ubator. The CASA business plan generally intends to deliver niche financial services via the Internet to middle American consumers.
Inc.ubator is also seeking ways to maximize the value of this investment for its shareholders, which may include certain spin-off or other disposition of the eCard minority share holding in the near future in connection with its anticipated reorganization.
About JUNUM Inc.
JUNUM is a financial technology company engaged in Credit Management, Debt Exchange and Financial Services. Credit Management works to improve a member’s credit rating and protect their credit identity through the removal of inaccurate, outdated and unverifiable information from their credit reports. This membership service is for individuals, small business and corporations with reoccurring monthly charges. Debt Exchange offers consumers and small businesses who may have become delinquent on a debt the opportunity to regain their credit standing. Financial Services uses the company’s patent-pending Analysis Engine to match its members’ credit status with loans, leases and other credit offers from the company’s lending partners. The company has filed nine applications for patents surrounding its three main business components. More information is available through the company and its Website: [http://www.junum.com].
Ecard is a niche consumer financial services organization specializing in credit card programs, including the Balance Transfer Program used for restoring financial performance for debt portfolios. The debt portfolio which is the subject of this announcement contains 189,000 individual accounts of non-performing debt originated from GE Capital Services Inc., a member of General Electric Co. (NYSE : GE); CitiFinancial, a unit of Citigroup Inc. (NYSE : C); Bank of America (NYSE : BAC); American General Finance Group, a division of American General Corp. (NYSE : AGC); Discover Financial Services, a business unit of Morgan Stanley Dean Witter (NYSE : MWD); FirstUSA, a subsidiary of Bank One Corporation (NYSE : ONE); Household Finance Corp., a unit of Household International Inc. (NYSE : HI), and the Credit Card Services division of Chase Manhattan Corp., which recently merged with J.P. Morgan Co. to form J.P. Morgan Chase & Co. (NYSE : JPM). Due to the difficulty and inability of these companies to collect such non-performing credit card debt, portfolios are generally sold for a small percentage of their face value.
Inc.ubator is an Internet oriented company that invests in businesses (“Network Companies”), that use (or will use) the Internet to provide Internet-related support and access services to the novice computer user or “Newbies”, and to the small business/home office market. This segment of the population has been shown by government studies to be underutilizing the benefits of the Internet (“The Digital Divide”). The existing Network Companies, and ThemeWare intend to offer consumers and small businesses various bundled packages of services and technology which include access devices, support services, affinity discounts on non-discretionary purchases, as well as offering important financial services through Visa/MasterCard and other financing programs Inc.ubator is developing.
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