Creditrust stock rises on first day of issue Baltimore specialist in credit card debts finds strong demand

Financial services

July 30, 1998|By Bill Atkinson | Bill Atkinson,SUN STAFF

Shares of Creditrust Corp., a Baltimore-based company that acquires and collects delinquent credit card accounts, were up 3.6 percent yesterday in its first day of trading as a public company.

Creditrust's shares rose 56.25 cents and closed at $16.0625, up from its initial public offering price of $15.50. The stock is traded on the Nasdaq stock market under the symbol CRDT.

"I feel like 100 million bucks," said Joseph K. Rensin, Creditrust's 33-year-old founder, who was pleased with the results of the offering. "I feel wonderful."

Rensin owns 5.125 million shares of the company, which were worth more than $82 million at yesterday's close.

Creditrust had planned to sell 2 million shares at prices ranging from $13 to $15, but demand for the stock from large investors was strong, Rensin said.

Before the offering, the underwriters increased the initial offering price to $15.50 a share, and Rensin decided to sell an additional 500,000 shares.

The sale raised $31 million for Creditrust, and Rensin reaped $7.8 million from the sale of his shares. He still owns more than 60 percent of the company.

"There was a huge demand," Rensin said. "The mutual funds couldn't get enough of it. We increased it [the offering size] at their request."

The offering was underwritten by Washington-based Ferris, Baker Watts Inc. and Boenning & Scattergood Inc. of suburban Philadelphia.

Creditrust plans to use the money to pay off $6.5 million in debt and to buy troubled credit card debt from banks and finance companies, Rensin said.

Rensin said he receives three to four calls a day from banks looking to sell portfolios of delinquent credit card loans.

"We are aggressively growing," Rensin said. "It is an exciting industry, and we are perfectly positioned to take real advantage of it."

Since its inception in 1991, Creditrust has grown to 425 employees, up from 245 at the end of 1997. In 1994, it had 44 employees.

Creditrust has not only grown quickly, but it has been profitable.

From 1993 to 1997, the number of accounts has grown to 580,353 from 27,366; and the portfolio of credit card receivables is $1.1 billion, up from $71.2 million, according to the company's prospectus.

Last year, Creditrust made $456,000 on revenue of $9.8 million, compared with net income of $474,000 for the same period a year earlier, on revenue of $5.5 million.

Pub Date: 7/30/98

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