Encore Capital Group
, an accounts receivable management firm, saw its shares jump Wednesday, a day after the company disclosed plans to buy a group of assets from Jefferson Capital, a unit of
Encore paid $142.8 million for a portfolio of charged-off consumer credit card debt with a face value of roughly $2.9 billion; an agreement to buy an additional $3.25 billion in face value of new credit card charge-offs from Jefferson over the next five years; and a collection site in St. Cloud, Minn., with some 120 employees.
Shares of Encore were gaining $1.69, or 11%, to $16.91.
As part of the transaction, San Diego-based Encore extended its existing pact to sell Chapter 13 bankruptcies to Jefferson for an additional two years and agreed to provide Jefferson with a prescribed number of accounts on a monthly basis for its balance transfer program.
To facilitate the deal, Encore arranged for a new credit line with JPMorgan Chase Bank. Additionally, Encore said it invested $21 million in May to purchase another portfolio of credit card receivables from a separate issuer.
The company also said it expects earnings for the second quarter of 26 cents to 30 cents a share. Encore added that strong second-half results should lead to full-year earnings of $1.25 to $1.33 a share. On average, analysts polled by Thomson First Call are looking for Encore to earn 30 cents in the second quarter and $1.23 for the year.