The Desoto, Tex., bill-to-phone payment processor eTelcharge.com Inc. has a deal to buy a larger rival, PaymentOne Corp. of San Jose.
Rob Howe, eTelcharge's chairman and chief executive, said Tuesday in an interview that the two companies signed a definitive agreement June 11. The deal is subject to approval by the U.S. Bankruptcy Court for the Northern District of California, because PaymentOne's parent, The Billing Resource, which did business as Integretel Inc., has filed for bankruptcy protection.
"This acquisition is a very major step forward for us," he said.
eTelcharge would pay $12.8 million in cash for 98% of PaymentOne, essentially canceling a debt owed to PaymentOne. eTelcharge would pay for the remaining 2% with its stock.
"Payment One is not in bankruptcy. Their parent is in bankruptcy," Mr. Howe said.
PaymentOne, founded in 2000, has estimated annual revenue of $13 million, largely from letting consumers add charges to their home telephone bill to pay for such things as AOL LLC's Internet services or access to the Worlds of Warcraft online game. The publicly traded eTelcharge reported a loss of $2.9 million for last year on revenue of $44,000.
Mr. Howe said eTelcharge is licensed in only five states: Texas, Oklahoma, Arkansas, Kansas, and Missouri. "What we get when we get PaymentOne is a nationwide platform."
The deal is set to close this summer.