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between WFNNB and the stores with respect thereto. Among other
things, the merchant agreements entitled WFNNB to issue credit
cards bearing the name and logo of each store to customers of
that store.
Also upon receipt of its charter, WFNNB sent notices (change
of terms notices) to holders of the credit cards previously
issued under the credit plans operated by Limited Credit and WFN.
The change of terms notices, among other things, informed such
credit card holders that WFNNB would be the extender of credit on
their account and, for credit card holders in certain States,
there would be an increase in the interest rate on their
accounts.
As of January 30, 1993, WFNNB had opened 12.9 million credit
card accounts, and it had outstanding credit card loans in excess
of $757 million.
WFNNB: Capitalization and Liquidity Needs
WFNNB had cash (liquidity) needs that could not be met
without borrowing. Limited Service Corp. (Limited Service),
another member of the affiliated group, performed the “treasury
function” for WFNNB. That function included assisting WFNNB in
meeting its liquidity needs. Limited Service had access to
funds generated by petitioner’s sale of its commercial paper.
Initially, WFNNB’s liquidity needs were met from within the
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