SPARTANBURG, S.C., Feb. 9 /PRNewswire-FirstCall/ -- Advance America, Cash
Advance Centers, Inc. (NYSE: AEA) today announced that it has settled a class
action lawsuit in Georgia that resolves all claims against the Company in
connection with originating, marketing, or servicing any loan in that state.
The settlement, which does not involve any finding of wrongdoing, requires
final approval from the State Court of Cobb County, Georgia. The Company had
previously suspended operations in Georgia during 2004.
If approved, the settlement will require the Company to make a minimum
payment of approximately $2.0 million from which (1) a settlement pool will be
established to pay claims; and (2) attorney fees and other costs related to
the litigation and settlement administration will be paid. The value of
individual claims will vary between $30 and $90. If claims made plus costs
exceed $2.0 million, then the Company will be required to pay additional funds
into the settlement pool up to an aggregate cap of $3.7 million. If claims
made plus applicable costs are less than the minimum payment, the court will
distribute the balance of the minimum payment to a charitable organization of
the court's choosing. If claims made plus costs are greater than the cap, then
claims will be prorated so as not to exceed the cap. The Company has reserved
approximately $2.0 million for this settlement, which will result in a charge
against earnings in the fourth quarter of 2008.
Commenting on the settlement, the Company's Vice President of Legal and
Regulatory Affairs, Tom Newell, said, 'Advance America possesses a strong
culture of legal and regulatory compliance and the Company will continue to
aggressively defend its products and services against these types of claims.
However, a settlement like this one makes good business sense and brings value
to our stakeholders by assuring certainty of outcome and eliminating
continuing legal costs in a geographic market where we no longer conduct
business. We are pleased to have reached a favorable result.'
Separately, the Company also announced today that it plans to close the 24
centers it operated in the State of New Hampshire.
