Safecard Shareholders Approve Restructuring, New Name

The mood was upbeat at Safecard Services Inc.'s annual meeting as shareholders overwhelmingly approved chairman Paul Kahn's restructuring plan as well as a new holding company name - Ideon Group Inc.

Even so, former Safecard chairman Peter Halmos' full-page ad in The Wall Street Journal the same day, charging Mr. Kahn and the company with violating Securities and Exchange Commission rules, put a damper on some shareholders' spirits.

Some at the New York meeting last Thursday raised questions about the effects of the persistent litigation involving Mr. Halmos.

One shareholder complained that Mr. Halmos' attacks and lawsuits "are affecting the price of stock and the psychology of the company."

Mr. Kahn, who presented a rosy picture of the five independent business units that will operate under the Ideon banner, replied, "It's not affecting the psychology of the management." Mr. Halmos' actions are "baseless" and intended to "hurt the company," Mr. Kahn said.

The stockholder appeared agitated, asking what could be done to mitigate the legal threat. Mr. Kahn pointed out that he "can't stop (Mr. Halmos) from (exercising) his free-speech rights to advertise." The company's response, he added, is "left up to our lawyers."

Mr. Kahn, whose track record includes launching the AT&T Universal Card and who was hired in 1993 to diversify Safecard from its base in credit card registration services, said legal expenses for Ideon/Safecard have fallen from more than $1 million a month to just more than that per quarter.

He also said the company's market value rose 74% in 1994, to $546 million.

Mr. Halmos was ousted in 1992 from the company he had founded in 1969. He asserted in a telephone interview that "under Kahn, the company is deteriorating while concurrently Kahn is launching new, high-risk crap shoots that may or may not work."

Mr. Halmos was referring to ventures such as the Collections of the Vatican Museum, which markets art reproductions, and the Family Protection Network Inc., which tracks lost children.

He also said the PGA Tour Partners Program, which includes a cobranded credit card issued by a SunTrust Banks subsidiary, puts Safecard in competition with its traditional business - marketing card protection services through card issuers.

A shareholder questioned Mr. Kahn about the Journal ad, which said Safecard had lost the business of longtime clients Lord & Taylor, and Texaco.

Mr. Kahn replied that large corporations "win and lose customers on a regular basis." He added that the loss of Lord & Taylor, an upscale but relatively small retailer, would have no impact on earnings and that Safecard is hoping to retain the Texaco account.

The company has added clients for the core business, he said, including First USA Inc., Banc One Corp., the General Motors MasterCard program, Signet Bank, the Limited and its affiliates Express and Victoria's Secret, and others.

Mr. Halmos called Ideon a "shell company" and accused Mr. Kahn of manipulating stockholders to exchange Safecard shares for Ideon shares.

"I seek to have Kahn and the directors disclose completely all material information so that shareholders can evaluate what is really happening with Safecard and Ideon," the ex-chairman said.

"I hope they are very successful in whatever it is they wish to achieve," he added, referring to Ideon, "so long as it is accomplished lawfully."

Mr. Kahn said he is "aware of what Mr. Halmos is doing but we have to go on with the goal of transforming the company and let him remain mired in the past."

At the shareholders meeting, two new directors were elected: John Ellis Bush, son of the ex-President, and Robert Dilenschneider of the Dilenschneider Group, a public relations company.

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