Liberty signs letter of intent to purchase Cavion Tech

MOUNDS VIEW, Minn. and ENGLEWOOD, Colo. -- Liberty, a payment systems provider to the credit union industry, has signed a letter of intent to purchase the assets of Cavion Technologies Inc. (Nasdaq: CAVN).

Cavion offers products and services for secure business-to-business communications and secure Internet financial products and services designed for credit unions. The company develops enabling software for kiosks and Internet software products that provide online transactional banking, bill payment and loan information.

The sale of Cavion would make the company part of Liberty, a 15-year-old private, employee- and family-owned company with 920 employees. Based in the Minneapolis-St. Paul, Minn., suburb of Mounds View, Liberty serves 5,000 credit unions in all 50 states, Guam and Puerto Rico.

Terms of the agreement, which were not disclosed, were filed with the U.S. Bankruptcy Court for the District of Colorado, Denver. Cavion filed for Chapter 11 bankruptcy protection on Dec. 21, 2000.

According to Robert D. Anderson, Liberty president and CEO, Cavion management supports the conditions that Liberty believes are needed to strengthen Cavion's financial stability: appropriate levels of staff and infrastructure along with increased fees for Cavion's products and services to credit unions.

The next steps in the acquisition plan are to establish new, three-year contracts with Cavion's credit union customers; set up a new pricing structure for Cavion's products and services to ensure profits and a break-even operating income; renegotiate agreements with Cavion's suppliers and business partners; and seek acquisition approval by mid-February from the bankruptcy court with which Cavion has filed for Chapter 11 protection.

Liberty is seeking service agreements from 231 credit union entities around the country that are Cavion customers. Anderson said Liberty's acquisition decision will be based on Cavion customer response and commitment by Jan. 31. The letter of intent allows Liberty to withdraw its bid to purchase if customer response does not meet Liberty's goals.

Under bankruptcy reorganization, Cavion remains in possession of current operations and assets during the reorganization period and has had ongoing negotiations with several entities interested in acquiring Cavion's assets and providing capital to continue operations and services.