Advanta Corp., a
provider of credit cards to small businesses, must pay $29.4
million for duping FleetBoston Financial Corp. into overpaying for
a consumer credit-card unit, a Delaware judge ruled.
FleetBoston sued Advanta in Delaware Chancery Court in 1999
for understating liabilities in the sale and failing to disclose
problems coding the correct interest rates on accounts. The coding
problem later forced FleetBoston to refund $41.8 million,
according to court papers.
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“If you pro-rated this $29 million over the share base, it
doesn’t come out to very much,” said Christopher Bingaman, who
oversees $120 million at Diamond Hill Capital Management in
Columbus, Ohio, and sold his last 20,000 FleetBoston shares
earlier this month.
The ruling comes as FleetBoston, the seventh-biggest U.S.
bank, is seeking additional damages from Advanta in a Rhode Island
court over the potential loss of $508 million in tax deductions
for bad loans by the credit-card unit. FleetBoston acquired the
unit for $532 million in assumed debt in 1998.
Both companies have claimed the tax deductions on the loans.
FleetBoston contends it deserves damages if a U.S. tax court
reviewing the case denies the deductions, Advanta said in Jan. 17
filing with the Securities and Exchange Commission.
Bloomberg News
