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The relationship between CompuCredit Corp., an Atlanta marketer of subprime credit cards, and Encore Capital Group Inc., the San Diego company that agreed to buy its charged-off card receivables, appears to have soured.

Last week Encore said it had declared CompuCredit in breach of their agreement, because of a lawsuit the Federal Trade Commission filed last month accusing it of deceptive marketing practices. (The Federal Deposit Insurance Corp. filed a similar suit against CompuCredit and two banks last month.)

CompuCredit said the same day that Encore was in breach of the deal, in part because it did not make a scheduled purchase July 10.

Sameer Gokhale, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., wrote in a note published Monday, "We are not lawyers, but the agreement seems to state any litigation against CompuCredit should not materially prevent CompuCredit from performing its obligations or have any material impact on the sold accounts."

Mr. Gokhale also wrote that "the vast majority" of receivables sold under the contract likely were originated after June 2005, so they "mostly exclude 2001 to 2004 originations that are part of the FTC and FDIC lawsuits."

He increased his full-year loss estimate for CompuCredit by 33 cents, to $4.10 a share, and he lowered his earnings estimate for next year by 44 cents, to 93 cents, to reflect the assumption that the agreement with Encore has been terminated. "CompuCredit may be able to line up other partners to sell these accounts to, but likely at lower prices."

By midafternoon Monday CompuCredit's shares had dropped about 3.8% from Friday's close.

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