Magazine article American Banker

Fee in Air, Alliance Data Guides

Magazine article American Banker

Fee in Air, Alliance Data Guides

Article excerpt

Alliance Data Systems Corp., whose deal to sell itself to Blackstone Group will formally expire today, gave earnings guidance for this year that was generally in line with analyst estimates.

Robert J. Dodd, an analyst with Regions Financial Corp.'s Morgan Keegan & Co., said he was sure the timing of the disclosure "is not entirely coincidental."

The Dallas company, which issues private-label credit cards for retailers and also runs marketing and loyalty programs for financial institutions and for other companies, should collect a $170 million termination fee that was part of the $7.8 billion deal signed last year with Blackstone.

Solid financial performance would give Blackstone's attorneys less room to back out of paying that fee, Mr. Dodd said.

In attempting to avoid the fee, "one of the claims that Blackstone could make is they are worried about consumer credit ... to which ADS says, 'Hey, it hasn't affected us,' " he said.

In an investor presentation filed Wednesday with the Securities and Exchange Commission, Alliance Data said it expects to report a profit of 98 cents to $1 a share for the first quarter. The average estimate of analysts calls for a profit of 99 cents. Alliance Data is scheduled to report the results April 23.

The company also indicated it expects to meet analysts' profit estimates for the second and third quarters and for the full year. Its profit forecast for the fourth quarter was a penny shy of the average estimate. …

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