Holders of approximately $1 billion of First North American National Bank (FNANB) credit card ABS cheered last week's announcement that the $1.5 billion portfolio would be sold to FleetBoston Financial. While the move was viewed an undeniably positive for FNANB parent Circuit City, objective observers were questioning Fleet's motivation for acquiring the underperforming portfolio.
Word broke last Wednesday that Circuit City agreed to sell its $1.5 billion FNANB Visa/MasterCard portfolio to Fleet for $1.3 billion, roughly a 13.5% discount. Circuit City will realize after-tax net proceeds of $282 million. The Circuit City Credit Card Master Trust retail credit card portfolio was excluded from the sale. The retail chain announced in August that it would explore the possibility of selling its credit card operations, including its retail store card portfolio.