April 18 (Bloomberg) -- Blackstone Group LP's deadline to buy credit-card processor Alliance Data Systems Corp. passed without word from either side on what will happen to the stalled $6.6 billion transaction.

The contract allows New York-based Blackstone, manager of the world's largest leveraged-buyout fund, to end the deal if it wasn't completed by 11:59 p.m. New York time yesterday, according to a U.S. Securities and Exchange Commission filing last year. Blackstone said in January that it may not close the purchase because federal regulators want it to provide open- ended funding support to an Alliance Data bank unit.

Ed Heffernan, Alliance Data's chief financial officer, told investors at an April 16 conference in Atlanta that the company is now outlining its prospects and strategies to shareholders rather than focusing on the buyout plan, which was announced 11 months ago.

``We're right now in what we call deal purgatory, and hopefully that will pass, as we begin to start getting out and educating folks on the company, and what we do and how we do it,'' he said.

Shelley Whiddon, a spokeswoman for Dallas-based Alliance Data, didn't return a phone message yesterday. Blackstone spokesman Peter Rose declined to comment.

Regulators

The LBO may be the latest to fail since the global credit markets melted down last year, boosting borrowing costs and slowing the U.S. economy. In September, New York-based Kohlberg Kravis Roberts & Co. pulled out of its agreement to buy Harman International Industries Inc., the Washington-based maker of Infinity and JBL audio equipment, for $8 billion, citing a decline in the business.

Cerberus Capital Management LP, also based in New York, dropped its $4 billion takeover of Greenwich, Connecticut-based United Rentals Inc., the largest U.S. construction-equipment rental company, in November.

Piper Jaffray analyst Robert Napoli raised his rating on Alliance shares to ``buy'' from ``neutral'' today and set a price target of $74 a share.

Alliance Data rose $1.23, or 2.5 percent, to $51.31 at 10:35 a.m. in New York Stock Exchange composite trading, a 37 percent discount to Blackstone's $81.75 purchase price. Blackstone shares rose 55 cents, or 3 percent, to $19.18.

Blackstone said in January that the U.S. Office of the Comptroller of the Currency was imposing unworkable conditions on the takeover of Alliance Data, which owns the OCC-regulated World Financial Network Bank.

Alliance Data said last month that Blackstone was using the regulatory hurdle as an excuse in order to ``run out the clock'' on the transaction. It said Blackstone breached the merger agreement, which requires the firm to work with regulators to try to win approval.

Under the agreement, Alliance Data is entitled to a $170 million fee if Blackstone doesn't live up to its end of the deal. Blackstone said at the time that it has fully complied with all of its obligations.

To contact the reporter on this story: Zachary R. Mider in New York at zmider1@bloomberg.net

Last Updated: April 18, 2008 10:50 EDT