Creditrust ends its bid for loan; Company sought $55 million to return to growth track; 'Hardly cataclysmic'; Debt collection


Creditrust Corp. has ended its bid for a badly needed $55 million loan, but is working on other deals to raise the capital required to return the company to a growth track, the Baltimore-based firm said yesterday.

"This is unfortunate, but it's hardly cataclysmic," said Joseph K. Rensin, Creditrust's chairman, chief executive officer and founder.

Creditrust, which buys and manages delinquent credit-card accounts, needed the loan to fuel its growth: The money would make it possible to pump up purchases of in-arrears credit-card loans, the company said in February. Yesterday, however, Creditrust said it ended talks with an unidentified potential lender after the two sides couldn't agree on the terms of the loan. Instead, Creditrust said it's pursuing alternative capital strategies that it hopes can be announced in "the coming weeks."

The company says those "alternate options" -- which could take many forms, though it declined to describe them -- should provide the company with the money needed to continue its growth march.

"It's a disappointment," said analyst Derek S. Derman, who follows Creditrust for Wedbush Morgan Securities in Los Angeles.

Derman's disappointment stems from two sources. First, the company can't grow without the extra financing. Nor will it be as easy to attract a partner, or even to sell, Derman contends. In December, Creditrust said it had hired investment banker Goldman, Sachs & Co. to advise it on "strategic alternatives," with the focus being on finding a deep-pocketed partner. Having financing in place makes Creditrust a much more attractive investment for a partner or suitor, Derman said.

Rensin denied that the failure to land this loan would hamper the Goldman, Sachs search for a partner.

Rensin also emphasized that Creditrust is seeking a partner -- not a buyout. In February, Creditrust said its fourth-quarter profit slipped by more than half to $3.4 million after it took a $2 million charge and dramatically reduced its purchases of delinquent portfolios. In the fourth quarter the year before, Creditrust had earned $7.4 million.

The company's stock fell $1.0313 yesterday to close at $3 a share. In the last 52 weeks, it's traded as high as $34.125, reaching that point in late July.

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