Equitex, Inc. announced Monday the signing of a definitive agreement for the acquisition of First TeleServices Corp.. The transaction is expected to close by the end of August. As previously announced, Atlanta, Georgia based FTC will merge into a wholly owned subsidiary of Equitex through the issuance of 625,000 shares of Equitex common stock in exchange for all of the outstanding shares of FTC.
FTC is a fee-based financial services organization consisting of a database marketing division, consumer finance division, an inbound/outbound calling center and an operations center. FTC will perform as a consumer finance company offering a broad array of financial products and services to the sub-prime market. These products will be developed and serviced through correspondent relationships with companies specializing in those particular products including debt transfer servicing, secured credit cards, B and C mortgage loans and sub-prime auto loans. To implement its business plan, FTC has developed strategic alliances with a number of nationwide organizations to outsource the products and services it offers.
“We are extremely excited about the addition of FTC to our portfolio,” stated Equitex President, Henry Fong. “We believe FTC’s unique approach to database management, debt servicing and financial services along with their two year head start on the competition will provide Equitex and its stockholders with a dynamic player in the burgeoning sub-prime lending industry. This acquisition is an integral step in our decertification plan.”
“Completion of this merger gives FTC access to both the public and private capital markets providing us the means necessary to take advantage of the numerous strategic alliances and marketing agreements we have in place,” stated FTC President, John Cahill. “The merger is just one step in our overall business plan allowing us to move from the research and planning stage to the operational stage of our company’s development.”
FTC recently announced the signing of a marketing agreement with Premier Capital, LLC (“Premier”) of Lawrence, Kansas that arranges the purchase of charged off credit card debt from financial institutions. Premier operates a collection division with the fifteenth largest law firm in the United States specializing in consumer collections with $40 million in collections last year. Premier’s agencies are located in forty cities throughout the United States with over $600 million in total collections last year. FTC has developed a debt transfer program to assist Premier in its collection efforts by providing a new credit account servicing facility for debtors. Premier will place over 240,000 accounts with FTC’s debt transfer division amounting to $100 million worth of net revenue servicing business per year. Of that amount, FTC is forecasting a collection rate of approximately 40% of net revenue serviced from which FTC will receive 25%. In addition, FTC plans to offer selective products and services to these customers generating additional cross-sales profit. The agreement consists of a five-year plan with a one- year term including automatic annual renewals.
Equitex, Inc. is a business development company under the Investment Company Act of 1940, as amended.Details