ADS says Blackstone in breach of contract

By Jessica Hall

PHILADELPHIA (Reuters) - Alliance Data Systems Corp (ADS.N: Quote, Profile, Research) said on Monday that Blackstone Group was in breach of contract by failing to use its best efforts to resolve regulatory hurdles on the planned $6.76 billion buyout of the credit-card transaction processor.

"By seeking to delay favorable resolution of these regulatory approvals, Blackstone and its affiliates are attempting to 'run out the clock' on the transaction,' Alliance Data said.

"Although they appear to have developed a case of buyer's remorse, Blackstone and its affiliates are still required to comply with the terms of the agreement," Alliance Data said.

A spokesman for Blackstone said the buyout firm had complied fully with all of its obligations under the merger agreement and any claims to the contrary were "absurd."

Under the terms of the agreement, either party can terminate the deal if it fails to close by April 17. Both sides must make "reasonable best efforts" to close the deal, according to filings with U.S. Securities and Exchange Commission.

Alliance Data, which processes credit card transactions, handles billing, direct marketing and provides other services, said it had offered to cut the price to help satisfy conditions imposed by banking regulators.

Blackstone rejected that offer and suggested more concessions, Alliance Data said.

Blackstone previously said the deal could be in jeopardy due to regulatory conditions imposed by the U.S. Office of the Comptroller of the Currency.