When the asset-backed securities market–the lifebloodof the credit card industry–froze up during the credit crisis,Alliance Data Systems was hit along with the rest of the industry.But that's where Alliance's similarity to competitors such asMasterCard and Discovery Financial Services ends.

Instead of hunkering down, conserving cash and riding out thestorm as most others were doing, Alliance, which through its threebusinesses runs private label, co-branded credit card programs andloyalty rewards programs for such companies as Crate & Barrel,Ann Taylor and J. Crew, adopted a contrarian stance and looked togrow its business, thanks in large part to its treasurer, RobertArmiak.

Robert Armiak

Armiak, who has worked at Dallas-based Alliance since 1996, hadlocked in capital ahead of the crisis. With the ABS market incardiac arrest, he went out and secured an additional $2.5 billionof funding through a bank term loan, a convertible debt offering,brokered CDs and extended bank conduits. Armiak added another $1.65billion of liquidity by jumping early into the Term Asset-BackedSecurities Loan Facility (TALF), the program launched by theFederal Reserve to revive the ABS market. Armiak took advantage ofTALF to replace Alliance's short-term borrowing with longer-termdebt.

“We knew we weren't going to have any trouble funding ourprivate-label credit,” Armiak says, because of the strong creditscores of consumers who shop at these retailers and the lowbalances those consumers maintain on their cards. In fact, Allianceopened up credit for that part of its business, acquiringportfolios that were being disposed of at fire-sale prices. “Wemade a pitch to grow that business when most banks were conservingcredit,” he says.

Even more daring was Alliance's decision to launch a stockbuyback at a time when most companies had suspended buying shares.Alliance's stock had plummeted to around $25 a share, a fraction ofwhat CEO Edward Heffernan and Armiak believed it to be worth.Armiak tapped into the convertible bond market to raise more than$1 billion and used the proceeds to purchase 35% of Alliance'sshares on the cheap. The stock has since recovered to around $70 ashare.

Looking ahead, Armiak is making certain that Alliance's capitalstructure is in place so the company can continue to grow. The key?Keeping a large tool kit of financial instruments and maintainingstrong relationships with investors, he says. “I don't go two dayswithout talking to some debt investor or banker somewhere.”