The Internal Revenue Service has given oral approval to Fingerhut Cos.' plan to spin off Metris Cos., its 83%-owned credit card subsidiary.
Fingerhut's board of directors has approved the spinoff, set to take place Sept. 11, and expects to distribute dividends Sept. 25.
Metris, one of the top 20 credit card issuers, plans to attack the capital equity markets, said Ronald N. Zebeck, president and chief executive of Metris.
"We can use our stock for acquisitions to buy more credit card portfolios or card companies," Mr. Zebeck said. Instead of a $100 million portfolio acquisition, "maybe next time it will be a $1 billion portfolio," Mr. Zebeck said.
Nearly 40% of Metris' accounts were acquired through Fingerhut's 10 million customer data base. The contract allowing Metris access to Fingerhut's customer data base will expire in 2003, but Mr. Zebeck said Metris will continue to have rights to Fingerhut's customers.
Fingerhut applied for IRS approval nearly a year ago. "Normally when you do a spinoff, you get rid of your declining business, but Metris is a growing company," Mr. Zebeck said.
Metris acquired one million new customers in the second quarter of 1998.