This article appears in the March 26, 2009, edition of ISO&Agent Weekly.
Phoenix Merchant Processing Inc. has elicited one bidder, North American Bancard, for approximately 2,000 merchant accounts, a document filed in the U.S. District Court, District of Oregon, shows. The Troy, Mich.-based ISO, would pay $3.1 million for the accounts if the court approves the sale.|
Phoenix's merchants handle approximately 300,000 monthly transactions valued at about $18 million, Phoenix has said.
Two years ago, Phoenix Merchant Processing, then known as Merchant Processing Inc. and under different management, ran afoul of the Federal Trade Commission and the state of Washington for alleged fraudulent dealings with merchants. In February, the court-appointed receiver put the company up for sale.
The Phoenix merchant accounts are a "good value" and share the same processing network as North American Bancard, Marc Gardner, North American Bancard president, tells ISO&Agent Weekly. His company would integrate the merchants into its existing transaction network.
North American Bancard also would be credited for $270,000 against the sale for fees it would pay on behalf of the processor Phoenix to Global Payments Direct Inc.
Michael A. Grassmueck, the court-appointed receiver, has recommended the sale be approved. In the court document, Grassmueck cites "significant uncertain market conditions," the length of time Phoenix has been for sale and some unspecified conditions of the company's contract with Global Payments as reasons for approving the sale now.
Since 2007, when Merchant Processing was placed into receivership, the plan was to sell the company, CEO Jim Keller previously told ISO&Agent Weekly.
Grassmueck says potential buyers have expressed interest for about a year.
In 2008, the previous owners reached a $26 million settlement with the FTC.
Proceeds from the Phoenix sale would go into the settlement fund.
North American Bancard acquired another merchant-account portfolio earlier this year, Gardner says, declining to disclose details of that transaction. The ISO is scouting for other acquisitions because the company has no debt and is well capitalized, he says.
"North American Bancard is very well positioned in this financial crisis," Gardner says. The court filing says April 10 is the deadline for "overbids" and that they must be at least $150,000 more than the current bid.
Additionally, if more than one bid is received by April 10, the receiver will hold an auction for the Phoenix portfolio.
Grassmueck tells ISO&Agent Weekly that other entities are considering bidding on Phoenix, but none have submitted an official bid as of Monday.
Other bids would have to "be very real without contingencies and with earnest money upfront," Grassmueck says.
All bids are subject to review by a federal judge, and the process could take up to 30 days.