Advanta Corp., which shut down lending for its 1 million cardholder accounts last month, has signed an agreement to refer some of those customers to American Express Co.
Advanta will receive a fee for every referred customer who opens an Amex account, according to a regulatory filing Friday.
In a filing Monday, the Spring House, Pa., issuer revealed that it will not complete another part of its capital and liquidity plan, as it has withdrawn a cash tender offer for up to $1.4 billion of its master trust senior notes.
Advanta, which specializes in small-business credit cards, said Friday that it had entered an agreement with Amex's Travel Related Services Co. "to extend an invitation for certain of the bank's customers to apply for an American Express card account."
Amex can also contact Advanta cardholders directly, according to the filing. The exclusive agreement is good for 60 days, "and for one year as to a limited number of the specified customers."
Advanta said on May 11 that its bank subsidiary would spend up to $1.4 billion to buy its senior credit card-backed notes from investors for 65 cents to 73 cents on the dollar. But it said Monday that its bank had terminated the offer for its senior trust notes, "because it recently has been determined that a regulatory condition to the tender offer will not be satisfied."
As a result of its terminated offer, Advanta said it "will not be able to complete all of the components of its previously announced plan to limit the Company's credit loss exposure."