Fitch Rates Metris

Fitch IBCA expects to assign its rating of `BB-‘ to Metris Companies Inc.’s (Metris) $150 million senior notes issue due 2006.

Fitch IBCA also assigns ratings of `BB’ to the multi-term $300 million revolving credit facility of Metris, and `BB’ to the long-term unsecured certificates of deposit of Direct Merchants Credit Card Bank, N.A. (DMCCB), the company’s wholly owned credit card bank.

Metris’ ratings reflect its solid earnings performance to date, its good capitalization, which was enhanced by a $300 million investment in 1998 by the Thomas H. Lee (T.H. Lee) Co., and its established niche presence in the subprime credit card sector. Concerns center on Metris’ relatively limited track record, rapid balance sheet growth and unseasoned nature of its credit card assets, and the company’s dependence on asset securitization as its primary funding source. The ratings also factor in the announcement that Metris will recognize a $152 million, one-time, non-cash, accounting charge reflecting the impact from the conversion of the $300 million investment by affiliates of the T.H. Lee Co. to the series C perpetual convertible preferred stock. Also, Metris ratings consider the expected completion of the purchase of a portion of the consumer bank card portfolios of GE Capital, which approximated $1.3 billion of receivables as of March 31, 1999.

Metris has reported solid earnings to date despite aggressive provisioning against an expected rise in future net write-offs. While future provisioning should more closely match annual charge-off levels, seasoning of the loan portfolio is expected to lead to higher loss rates in the future. Net income at Metris has been supplemented by increased fee-based income generated by the company’s fee- based services, which include debt waiver programs, membership clubs, third party insurance, and extended service plans.

While loss rates in Metris’ portfolio have to date been as expected, the performance of a nonprime unsecured credit card product has yet to be tested through a full economic cycle. Fitch IBCA is concerned that a period of economic weakness, combined with the limited amount of seasoning of the firm’s existing credit card portfolio, could lead to greater loss levels for the company in the future. As of March 31, 1999, Metris annualized managed net charge-off and 30-day delinquency ratios were 9.40% and 8.00%, which were expectedly above industry norms. These ratios have improved from prior periods as a result of the impact of purchase accounting related to acquired portfolios whose loss characteristics were better than Metris’ existing credit card portfolio. Partially offsetting the high loss rates has been Metris ability to appropriately price its credit card portfolio for risk. Also, the company has maintained healthy excess spreads in its existing securitizations.

In order to reduce the company’s heavy reliance on the securitization market for funding, Metris has begun to diversify its funding sources to include jumbo certificates of deposit issued through DMCCB, as well as senior unsecured debt through the parent company.

With $5.1 billion in total managed receivables at March 31, 1999, St. Louis Park, Minn.-based Metris is an information- based direct marketer of consumer credit card products and fee-based services, primarily to moderate income consumers.

Details spread it wings yesterday with a major ad campaign to officially launch its “financial supersite”. is a division of FCC National Bank, a Bank One subsidiary. covers a wide range of personal finance services including e-payment and e-loans. The site also features instant decisioning for credit products including home equity loans, installment loans and credit cards. Bank One says it has set up a special ‘iBoard of Directors’ to make suggestions, quarterly, on new Web services to offer.



Paymentech announced this week that it has begun utilizing frame relay telecommunication environments with TCP/IP for processing POS transactions for large hotel and resort clients. The company says dedicated network connectivity provides broader bandwidth for larger transaction and batch volume as well as increased speed for faster authorization. Among the hospitality clients to use TCP/IP are Venetian and New York New York hotels and resorts in Las Vegas.


Symposium Aquires Two

Symposium Corporation yesterday announced that, as part of its overall strategy to identify, acquire and consolidate companies in niche markets in direct marketing and financial services, it entered agreements to acquire two transaction-oriented companies.

Symposium has acquired from Direct Sales International LP (“DSI”) an option to purchase all of DSI’s assets for $22.9 million plus the amount necessary to enable DSI to repay its bank loan and the assumption of DSI’s accounts payable, accrued expenses and deferred revenues. The amount necessary to enable DSI to repay its bank loan is expected to be less than $1 million. The option expires on November 30, 1999.

DSI, which is based in Atlanta, Georgia, is a subscription sales agent provider for consumer magazines in the United States. DSI has been granted the direct authority to act on behalf of magazine publishers, accepting magazine subscription orders either directly from consumers or from independent telesales organizations and placing those orders with fulfillment houses designated by the publishers. The magazine subscriptions are sold to the customers in bundles of magazines. DSI generally finances these purchases by accepting from customers’ 12 equal monthly payments which are automatically charged to the customers’ credit cards. According to DSI, these receivables, net of reserves, exceeded $22 million at December 31, 1998.

According to unaudited financial statements provided by DSI, DSI had revenues of approximately $106 million and EBITDA of approximately $5.3 million for the year ended December 31, 1998. At that date, DSI’s accounts payable, accrued expenses and deferred revenues were approximately $3 million.

Symposium also signed an agreement with AmeriNet, Inc. to purchase 50.1% of the outstanding common shares of AmeriNet, Inc. for $5 million. This acquisition is scheduled to close within 45 days of the completion of AmeriNet’s audit, which has recently commenced. According to unaudited financial statements provided to Symposium by AmeriNet, AmeriNet processed approximately $16 million of transactions in 1998, its first full year of operation, with a loss before taxes, depreciation and amortization of approximately $400,000 for the year.

Based in Oregon, AmeriNet seeks to capitalize on the growth in E-commerce by offering a complete direct electronic debit service known as “debit-it”(TM) both to merchants selling goods over the Internet as a method of payment by the customer and as a service for business to business transactions. AmeriNet’s service permits merchants to offer customers an alternative to payment by credit card, which is particularly important in generating E-commerce sales to the estimated 40% of American adults who do not have a credit card. Payment by this method has approximately the same cost to the merchant as a credit card and is designed to be as easy to use by the customer as a credit card. AmeriNet, which conducts business under the name, currently services over one hundred individual merchants. These merchants include calling centers, distributors and fulfillment centers, all of which deal with transactions generated through infomercials and direct response commercials, as well as transactions which result from outbound and inbound direct marketing via telemarketing.

Rupert Galliers-Pratt, Co-Chairman and CEO of Symposium Corporation, commented, “These acquisitions represent an important step in our overall strategy and define the business and technology platform upon which Symposium expects to continue to grow. These companies each enjoy a prominent position in niche markets, have low capital expenditure requirements, operate in a fragmented competitive landscape and offer the opportunity for high growth potential and a high rate of return on investment. Each of these businesses, once acquired, will be actively managed so as to take full advantage of economies of scale, encourage third-party competitive pricing, capitalize on symbiotic opportunities and create additional transactional opportunities by leveraging the personal preference information produced by the transactions of these businesses. Moreover, Symposium will use each of these businesses as a springboard upon which to pursue a consolidation strategy in specific niches.”

Symposium is in the process of completing due diligence for each of these transactions. In addition, Symposium does not presently have the cash necessary to complete either the DSI or AmeriNet transaction. Accordingly, there is no assurance that Symposium will be able to complete either transaction.

Symposium also noted that the shareholders of Hamilton Telecommunications Ltd. had agreed to extend the final closing date to August 14, 1999 (from June 14, 1999). With the commencement of quotation for the Common Stock of Symposium on the OTC Bulletin Board, the principal remaining condition to closing that acquisition is obtaining the financing for the $5.75 million cash portion of the purchase price. Symposium is presently seeking to raise that financing, but as of this date has no commitments. Hamilton is an international audiotext service operator.

Lastly, Symposium announced that it had sold to Richard Prochnow, the principal owner and President of DSI and a 50% owner of AmeriNet, 2.5 million shares of Symposium Common Stock representing approximately 20% of the outstanding Common Stock, for a secured promissory note due December 31, 1999. Mr. Prochnow has the right to rescind the transaction, and the Company has the right to repurchase the shares, under certain conditions. As a result of that purchase, Mr. Prochnow has become the largest shareholder of Symposium. If the DSI transaction is completed, it is anticipated that Mr. Prochnow would become a member of the Board of Directors of Symposium.



WA-based The Pathways Group will announce this morning the signing of a contract to install two ‘SPRINTICKET’ unattended ticketing dispensers at Blue & Gold Fleet’s ‘Pier 41’ location at San Francisco’s Fisherman’s Wharf. The all-weather designed machines will accept all major credit cards as well as smart cards for the purchase of tickets for any of the ferry services and tours it offers. Under the terms of the contract, Pathways will perform credit card authorization at the time of purchase and end-of-day account reconciliation for all ‘SPRINTICKET’ transactions.

Details Goes Online

SAFLINK Corporation, a wholly owned subsidiary of The National Registry Inc. (NRI) Thursday announced the availability of a new Web site, ( ), that offers a live demonstration of the Company’s SAFsite Internet security tool. The site, which simulates a typical Internet banking/brokerage destination, requires that users present a biometric credential, or SAFtyPIN, created from an individual’s unique biological or behavioral characteristics, instead of a password, to positively identify them as authorized account holders. was designed using Sausage Software’s HotDog, built with Pervasive Software Inc.’s Tango Development Studio, and features downloadable speaker recognition modules from Lernout & Hauspie Speech Products NV (L&H) that work with browsers from Microsoft, Netscape, and America Online to capture, enroll and verify a user’s voice SAFtyPIN at the host site. First time visitors may open a new account and enroll their voice SAFtyPIN from any home, office, or mobile workstation equipped with a microphone and soundcard. Once enrolled, authorized account holders may return at any time to the demonstration Web site and use their voice to access account balances, pay bills, and transfer funds. Each new account is maintained for 60 days and users may establish as many accounts as they wish.

“The recently reported incident of a boy using his father’s password to bid on millions of dollars worth of merchandise at a leading Internet auction site could have been stopped with a SAFtyPIN,” said Jeffrey P. Anthony, chairman and chief executive officer of SAFLINK Corporation. “Passwords are too easily forgotten, hacked, and transferred between individuals and our resellers and technology partners have been asking for a sophisticated, maintenance-free SAFsite demonstration that is available around the clock for presentations to web administrators, content providers, and e-commerce suppliers. lets everyone test drive our state-of-the-art Internet security solution in a real-time production environment without having to purchase any software or special purpose hardware.”

SAFsite is part of the growing family of SAF multi-biometric security software products that have been seamlessly integrated with Microsoft Windows NT server platforms to address specific areas of network authentication. SAFsite is a software development tool that inter-operates with leading Internet application development tools, such as: Pervasive’s Tango, Microsoft’s Visual Interdev, Netscape’s SuiteSpot, and Allaire’s Cold Fusion to provide a more positive means of authenticating the identities of individuals seeking access to secured web pages. SAFsite provides browser extensions, ActiveX controls for Microsoft’s Internet Explorer and JAVA Applets for Netscape’s Communicator, that lead users through the biometric enrollment and authentication process. All enrolled user information is stored in the SAFserver using Microsoft’s SQL Server Database and RSA’s RC4 encryption. SQL Server replication and Microsoft’s Cluster Server provide scalability and resiliency for high traffic Web sites.

Priced at $199.95, the base version of SAFsite includes the SAFserver, built-in support for ten enrolled users, and downloadable modules for three leading biometric technologies including speaker verification from L&H, facial image recognition from Visionics, Inc., and fingerprint verification from Cogent Systems. SAFsite is fully compliant with biometric industry standards including the Human Authentication – Application Programming Interface (HA-API), developed by SAFLINK under contract to the US Department of Defense, and Intel’s CDSA User Authentication Service (UAS) draft specification. Optional database expansion packs can be separately purchased to increase enrollment capacity of the SAF Server into the millions of users. Biometric technologies from other HA-API compliant vendors are also available.

SAFsite’s multi-biometric architecture dramatically expands the universe of hardware components that can be used to capture SAFtyPINs from individuals over the Internet. With the expected growth in IP telephony and video conferencing, more and more computers will be configured with microphones and video cameras making implementation and administration of this proven technology a more ubiquitous, convenient, and cost effective means of establishing positive one-to-one relationships with customers, employees, and other users in a variety of Web based business-to-consumer and business-to- business applications. SAFsite currently supports most Microsoft audio/video compliant products and a growing number of low cost finger imaging scanners.

The National Registry Inc. and SAFLINK Corporation, based in Tampa, Florida, bring the Power of Biometric Identification to enterprise networks and the Internet. The Company provides cost-effective multi- biometric software solutions to verify individual identity, to protect business and personal information, and to replace passwords and PINs in order to safeguard and simplify access to electronic systems and enable new online services for customers. The Company’s Secure Authentication Facility (SAF) suite of multi-biometric network security products deliver enterprise-level secure access control to a growing list of software platforms and network applications, including Microsoft Windows NT and Internet Information Server, Novell NetWare and Computer Associates Unicenter TNG and its Single Sign-On option. Further information is available through the Company’s World Wide Web site .


NYCE Stays

NYCE Corp. and Magic Line confirmed Thursday morning they will operate under the single brand of ‘NYCE’ for all products and services when they complete their merger. Dennis Lynch will continue as President and CEO of NYCE Corp. with corporate headquarters in Woodcliff Lake, NJ. John Bascom, will serve as an EVP of NYCE and President of its Midwest Regional Business Unit, based in Dearborn, MI. When the merger is closed, NYCE will have 12 principal financial institution owners whose representatives will serve on the Board of Directors. In addition, the Board will have four seats for regional representatives from among the 240 financial institutions throughout the Northeast and Midwest regions. Bascom and Lynch are also on the Board. The branding decision followed a Midwest research plan designed by The Interbrand Group. Following the closing of the merger, NYCE will serve over 45 million cardholders in 15 states, through a network that includes 35,000 ATMs and 185,000 POS retailer locations.


Smart Corp Card

CyberMark, the leading developer and supplier of smart card solutions for education, corporate, stadium, and government markets announces it will deliver a multi application smart card initially targeted at the corporate market based on Microsoft’s Smart Card for Windows operating system. The first release of SmartWorld for Windows Campus ID Card will include debit, electronic purse, loyalty, and logical and physical security applications. The logical security application will include digital certificates and will be used to both authenticate individuals on the Internet and to provide a secure environment for Internet banking or secure other e-commerce activities.

“CyberMark has worked closely with Microsoft and is now ready to deploy the first multi application smart card based on the Smart Card for Windows platform,” said Thomas K. Burke, Vice President of Marketing for CyberMark. “We believe the dynamics of the smart card market are about to dramatically change as Smart Card for Windows gains market share. We are excited to be among the first to deploy a multi application card based on this revolutionary technology,” he stated. The CyberMark SmartWorld(R) Campus ID card will be available through CyberMark authorized resellers.

CyberMark teams with industry leading electronic commerce organizations like Microsoft, Gemplus, and First USA, via the SmartWorld(R) Partnership Program, to offer comprehensive smart card solutions. Focusing on core competencies — delivering and supporting smart card infrastructures, while integrating a variety of partner products — allows CyberMark to provide industry-leading solutions.

Founded in 1996, CyberMark is a leading electronic commerce company, specializing in the creation of smart card communities on the Internet and in closed campus environments. Cardholders conduct smart card based transactions using their cards at sites displaying the SmartWorld(R) logo. SmartWorld(R) is a registered trademark of CyberMark. To learn more about CyberMark, visit .


Amtrak AFCS

Amtrak and Motorola’s Worldwide Smartcard Solutions Division signed an agreement yesterday to introduce a state-of-the-art ‘Automated Fare Collection System’. The $24 million contract calls for the implementation of the fare collection system to begin with introduction of Amtrak’s new ‘Acela Express’ high-speed rail service between Boston-New York and Washington later this year. In Oct. 2000, it will be implemented throughout Amtrak’s nationwide rail network. On the ‘Acela Express’, conductors will use a hand held device configured with the train’s passenger manifest to read the ticket barcode, process ticket sales using credit cards, checks, cash or smart cards, and issue a receipt or seat check utilizing a separate printer that fits on the belt. The information captured by the HHD will be transmitted to an on-board computer via a HHD docking station. Once the train reaches a designated station, the data will be transmitted to a station information computer via wireless LAN technology, which is linked to Amtrak’s ‘Arrow’ reservations system. When operational nationwide in October 2000, data will be transmitted while the train is in motion via a wide-area, wireless communications network. The contract also calls for Amtrak and Motorola to test two smart card applications and eventually roll them out system wide. In one pilot project, frequent customers of Acela Express’ first-class service will be able to use the Motorola ‘M-Smart’ smart card as an e-ticket. In another pilot, the smart card will be used to track on-board meals on Amtrak’s long-distance trains.


The Exchange

Chase Manhattan, First Union and Wells Fargo announced Wednesday they are forming a new company to exchange electronic bills. The new company, to be called ‘The Exchange’, until the naming process is complete, will begin operating by year-end. The three banks said the new company will be the first organization to provide an open, interoperable mechanism for exchanging online bills, regardless of the technology employed by the individual members. The group points out that other players in the e-bill market use proprietary systems. ‘The Exchange’ will use Sun Microsystem’s ‘SunConnect’ open systems architecture to build the operating platform. VISA U.S.A. will also supply several software components and related support as part of the bill presentment solution. Integrion, governed by Bank of America, Bank One, Washington Mutual, and VISA, also plans to use ‘The Exchange’ as a component of the electronic bill presentment and payment services offered to its owner financial institutions and clients. The three founding members of ‘The Exchange’ have a combined customer base of nearly 60 million consumers and small businesses, relationships with more than 59,000 corporations and institutions nationwide, and issued nearly 300 million mortgage and credit card bills last year.


NextCard Ties The Knot

NextCard, Inc., and The Knot, the #1 online wedding resource and gift registry, announced today a joint Internet marketing agreement to offer unique card products and services specifically for newlyweds, to-be-weds and their guests at The Knot ( Under terms of the three-year agreement, the NextCard Internet Visa ( becomes the exclusive credit card at The Knot.

“Weddings represent one of life’s most significant financial commitments,” said Rebecca Miller, director of affinity programs at NextCard. “As the leading online issuer of consumer credit, NextCard is excited to work with The Knot to provide a completely customized card product to help relieve some of the stress and cost of wedding planning and purchasing. The Knot’s discriminating audience is a perfect fit for NextCard’s products.”

“Our mission at The Knot has always been to provide the greatest value and service to our users,” said Michael Wolfson, vice president of business development of The Knot. “By combining the leading online wedding resource with the leading online Visa card, we are able to offer a completely customized e-commerce solution to help make wedding planning and shopping easier, more fun and more affordable.”

In collaboration with The Knot, NextCard will design a credit card specifically tailored to the needs and interests of newlyweds and to-be-weds. >From the online application process to the actual plastic, the product will reflect the look and feel of The Knot. Cardholders who apply for the card at The Knot will be able to personalize their credit card online with their wedding photo and benefit from valuable online shopping and reward features.

About NextCard, Inc.

NextCard, Inc. is considered the industry’s leading issuer of consumer credit on the Internet. Since its launch in December 1997, over 2 million people have applied for the NextCard Internet Visa(R), making it one of the premier online credit cards. The Company continues to innovate with a Double Rewards program, complete GoShopping! tools, original PictureCard design, a one-click digital wallet and exceptional online customer service. NextCard was recently named a “HOT 100” company for 1999 by UPSIDE Magazine.

About The Knot

The Knot is the #1 online wedding planning resource and gift registry, offering content, commerce and community to the millions of newlyweds and to-be-weds who seek real-world wedding advice. Located on the Web at, The Knot is also the premier wedding destination on AOL (keyword: knot). In addition to being online, The Knot brand extends into the real world, including The Knot Complete Guide to Weddings in the Real World, the first in a three book series by Broadway Books; a television series on wedding planning; and a national print magazine in development. Based in New York City, The Knot is 100% free and open all night.