Popular, Inc. Agrees to Sell Check Cashing Operation to ACE Cash Express, Inc.

Popular, Inc. announced that ACE Cash Express, Inc. will acquire substantially all of the assets of Popular Cash Express, Inc. (“PCE”), Popular’s wholly owned check cashing business, for $36 million. PCE owns and operates stores in California, Arizona, Florida and Texas. PCE, unlike most other check cashing operators in the country, never entered the payday loan business.

Popular, Inc. will subscribe, as part of the transaction, a subordinated convertible note to be issued by ACE in the amount of up to $22.5 million. Under the terms of the Convertible Note Agreement, Popular has the right to convert the debt into common shares of ACE at a 35% premium over ACE’s average closing share price for the 30 days preceding the initial closing date. If exercised the convertible instrument would give Popular an ownership interest of 4.99% in ACE based on current outstanding shares. Popular and ACE also agreed to explore mutually beneficial opportunities in the areas of transaction processing, cash management, and working capital and term financing.

“We believe strongly in the potential of this business to serve well the large and growing low and moderate income segments of the population,” said Roberto R. Herencia, President of Banco Popular North America. “This will allow us to hold an investment of the largest publicly traded player in the retail check cashing business. We remain committed to the industry as lender and servicer, and will do so now without being a direct competitor.”

Richard L. Carrion, Chairman and CEO of Popular, said, “We have been constrained in our ability to compete fairly against non-bank owned check cashing operations. Offering loan solutions has become a key component of this business model. PCE has built a best-in-class compliance program, but without clear regulatory and legal guidance on new services, including lending, for bank-owned retail check cashing services, PCE cannot meet the demands of its customers.”

Carrion added that “Popular will continue providing comprehensive financial services to the underserved communities. We will remain an active participant in the industry as a lender and servicer to other retail check cashing institutions, and will continue to collaborate with regulators and lawmakers to accelerate the integration of unbanked and underbanked individuals into mainstream financial services.”

Jay B. Shipowitz, President and Chief Executive Officer of ACE, stated, “The addition of the Popular Cash Express stores, and more importantly their people, is an opportunity to strengthen our presence in several key markets and leverage our existing infrastructure. Consistent with our growth plans, we will continue to combine new store openings with opportunistic acquisitions like Popular Cash Express. We welcome their customers and their 333 employees to the ACE network of over 1,370 stores.”

The agreements signed by Popular and ACE do not require regulatory approval and are subject to customary closing terms and conditions. The transaction is expected to become effective during the month of October.