Advanta To Cease New Credit Card Lending

SPRING HOUSE, Pa. (AP) — Advanta Corp. said late Monday it will shut down its credit card lending operations next month as it battles surging loan losses.

Shares tumbled more than 6 percent, losing 7 cents to $1.06 in early trading Tuesday. Shares have dropped 88 percent over the past 12 months.

The Spring House, Pa.-based company, which focuses on issuing cards to small businesses, said in a statement that losses would erode its capital if it did not take such action.

The company will shut down all credit card accounts for future use in June, and will discontinue funding activity from the accounts. Advanta warned that closing the accounts would not accelerate payments required from cardholders on existing balances.

Additionally, Advanta Bank Corp. will use up to $1.4 billion to make a cash tender offer for Class A senior notes at a price of between 65 percent and 75 percent of their face value. Advanta also will make a cash tender offer for any or all of the $100 million of 8.99 percent securities issued by Advanta Capital Trust 1 at 20 percent of their face value.