Blackstone Group LP replied on Saturday to a lawsuit filed against the firm by Alliance Data Systems Corp. for $170 million saying it will defend itself vigorously and does not intent to settle.

The lawsuit was filed on Friday by the credit card service provider Alliance Data, claiming that Blackstone refused to accept reasonable and customary regulatory requirements, prolonging negotiations with regulators and hindering the fulfillment of the deal, Alliance stated.

In May 2007, Blackstone announced a deal to purchase Alliance Data for $6.6 billion, but the deadline for the deal to close expired on April 17. Blackstone has denied any infringement.

``We have fully complied with all of our obligations under the merger agreement and any claims to the contrary by Alliance Data are purely self-serving. Blackstone will defend this suit vigorously and does not intend to settle it, the group said in a statement.

Alliance filed the document with the New York Supreme Court, saying it isexpecting the payment in a full and timely manner, the company said. According to reports, the agreement - made almost one year ago- valued Alliance Data at $81.75 per share. On Friday shares of Alliance closed at $52.84.

Unfortunately, our extensive efforts have not succeeded in completing the transaction within the time frame set forth in the merger agreement and the agreement has therefore been terminated, a Blackstone spokesman said in a statement according to Reuters.

This is the second lawsuit filed by Alliance Data since the agreement between the companies was made last May. Some deals have suffered consequences of the current credit crisis that hit the economy since last summer.

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