Alliance Data Systems Corporation today announced that, in connection with the May 17, 2007 agreement providing for the acquisition of Alliance Data by affiliates of The Blackstone Group, Aladdin Solutions, Inc. (f/k/a Aladdin Holdco, Inc.) has informed Alliance Data that it does not anticipate the condition to closing the merger relating to obtaining approvals from the Office of the Comptroller of the Currency will be satisfied. The notice was given pursuant to the terms of the May 17, 2007 Agreement and Plan of Merger among Alliance Data Systems Corporation, Aladdin Holdco, Inc. and Aladdin Merger Sub, Inc.
Blackstone's notice, received by the Company after market close on Friday, Jan. 25th, stated that the OCC is "demanding that extraordinary measures be taken by ADS, Holdco and various Blackstone entities in connection with the Change in Control Notice" that "represent operational and financial burdens on ADS, Holdco and Blackstone that cannot be reasonably assumed."
In subsequent communications from Blackstone's representatives, Blackstone stated that it is unwilling to satisfy the requirements specified in the OCC letter. Blackstone also expressed its belief that alternative solutions that would be acceptable to Blackstone would not satisfy the OCC, and therefore that further negotiations with the OCC would be futile.
The Company strongly disagrees with Blackstone's stated assertions that (i) the OCC's most recent written proposal to Blackstone's counsel embodied the OCC's "final position" with respect to the terms on which the required approvals would be granted and (ii) the OCC is "demanding that extraordinary measures be taken by ADS, Holdco and various Blackstone entities in connection with the Change in Control Notice" that "represent operational and financial burdens on ADS, Holdco and Blackstone that cannot be reasonably assumed." Moreover, the Company believes that Blackstone has the ability to cause the condition to closing cited in Blackstone's letter to be satisfied.
Blackstone's notice did not assert any breach of the merger agreement by Alliance Data or the occurrence or anticipated occurrence of any material adverse effect on the Company, and acknowledged that the Company had, to date, used its "best efforts" to obtain OCC clearance. Neither did the notice reference or take issue with the financial or operational performance or liquidity of Alliance Data or its banks, or the parties' ability to obtain Federal Deposit Insurance Corporation approvals related to the Company's industrial loan corporation.
In light of the notice from Blackstone, the Company's board of directors and special committee are evaluating the Company's possible courses of action and will pursue those that best protect the interests of the Company and its stockholders.
The Company's fourth-quarter and year-end 2007 earnings and 2008 outlook announcement will be made at 3 p.m. Central/4 p.m. Eastern on Wednesday, Jan. 30, 2008. Alliance Data reaffirms the guidance given in its December 17, 2007 press release and its position with respect to the business trends discussed therein, all of which suggest no change in the Company's long-term expected growth rates.
Alliance Data's management will not be taking calls or responding to emails with regard to the transaction or otherwise while the board of directors and the special committee evaluate the Company's alternatives.
