Visa and American Express Settle Legal Dispute
07/11/2007 23:40
PR Newswire
SAN FRANCISCO, November 7 /PRNewswire/ --
- Settlement to be Funded by Visa USA Financial Institutions, Not Visa
Inc.
- Settlement Addresses Claims Against Bank Defendants
Visa Inc. announced today that the litigation with American Express
pending since 2004 has been settled. The settlement will ultimately be funded
by members of Visa USA -- not Visa Inc. -- through the company's
retrospective responsibility plan, a series of agreements with U.S. financial
institutions to fund financial obligations of certain litigation, including
this case. The plan was described in Visa Inc.'s recent S-4 filing.
The settlement agreement, which is contingent upon Visa USA member
approval, ends all current litigation between American Express and Visa USA,
Visa International and their members related to this issue. By settling this
litigation Visa is not conceding any liability in the dispute. In addition,
the settlement resolves American Express's actual or potential claims against
the named bank defendants in this case: US Bank, Wells Fargo, Washington
Mutual, JPMorgan Chase & Co. and Capital One. The agreement covering the bank
defendants absolves them of all responsibility in this matter related to
their participation in the Visa and MasterCard networks.
"Visa is doing what is in the best interests of its membership and the
new organization," said Visa Inc. CEO and Chairman Joseph W. Saunders. "Our
retrospective responsibility plan and these settlement agreements reduce risk
and uncertainty for our members and Visa. I believe this is a positive
resolution for Visa and its financial institutions."
Under the proposed agreement, American Express will receive US$945
million from Visa and an additional payment from the bank defendants by March
15 and no later than March 31, 2008. Beginning March 31, 2008, Visa will pay
American Express an additional amount of up to US$70 million a quarter for 16
quarters, for a maximum total of US$1.12 billion. Visa's nominal payout is
US$2.065 billion with an accounting reserve of US$1.9 billion and a net
present value to Visa of US$1.8 billion.
The member institutions of Visa USA - and not Visa Inc. - bear the
responsibility for funding the settlement through the application of Visa's
retrospective responsibility plan. The plan includes a multi-step mechanism
to fund financial obligations of Visa USA and Visa International related to
certain litigation, including the American Express case. Through this
mechanism, any payments made by Visa Inc. as part of this settlement
ultimately will be reimbursed by Visa USA member institutions.
"With this dispute behind us, Visa will remain focused on being a global
payments leader," Saunders said. "We are confident in our competitive
position and the value we provide our customers with our comprehensive suite
of products, secure and reliable payment system, and leading global brand and
merchant acceptance."
ABOUT VISA: Visa operates the world's largest retail electronic payments
network providing processing services and payment product platforms. This
includes consumer credit, debit, prepaid and commercial payments, which are
offered under the Visa, Visa Electron, Interlink and PLUS brands. Visa enjoys
unsurpassed acceptance around the world and Visa/PLUS is one of the world's
largest global ATM networks, offering cash access in local currency in more
than 170 countries. For more information, visit www.visa.com.
FORWARD-LOOKING STATEMENTS: This press release contains forward-looking
statements. These statements may be identified by the use of words such as
"will," "believes," "anticipates," "intends," "estimates," "expects,"
"projects," "plans" or similar expressions. Such forward-looking statements
include, without limitation, statements about the proposed settlement, our
retrospective responsibility plan, strategy, future operations, prospects,
plans and objectives of management and events or developments that we expect
or anticipate will occur. The forward-looking statements reflect Visa's
current views and assumptions and are subject to risks and uncertainties,
which may cause actual and future results and trends to differ materially
from the forward-looking statements, including but not limited to Visa's
ability to achieve its strategic objectives and the expected goals of the
settlement and our retrospective responsibility plan; general market
conditions; the outcome of legal proceedings; uncertainties inherent in
operating internationally; and the impact of law and regulations. Many of
these factors are beyond Visa's ability to control or predict. Given these
factors, you should not place undue reliance on the forward-looking
statements.
CONTACTS: Joseph Carberry
Visa
+1-415-932-2164
jcarberr@visa.com
Web site: http://www.visa.com
Joseph Carberry, Visa, +1-415-932-2164, jcarberr@visa.com