First Data

First Data Buyout Loans: Signs Of Life In The Loan Market

More news from planet LBO. Despite the rocky news on Archstone this morning, things are looking up this afternoon. The banks financing Kohlberg Kravis Roberts & Co. buyout of First Data Corp began selling around $10 billion of the deal’s bank loans.
As predicted, the loans sold at a discount. But at 96 cents on the dollar, the banks seemed to have little trouble placing the loans. Most have now been purchased by investors, DealBreaker can report.
The success of the First Data loan sell-off is being greeted as a welcome sign that there’s still life in leveraged loan land. “It’s a significant event on the road back to normality,” a London based hedge fund bond manager tells Bloomberg. “It shows that investors at least will accept a market clearing price and that wasn’t the case a month ago.”
KKR Banks Selling $10 Billion of First Data Loans [Bloomberg]

  • 25 Sep 2007 at 10:00 AM
  • Banks

Closely Watched First Data LBO Closes

First Data was supposed to be one of the big leveraged buyout deals teetering on the edge of extinction thanks to the credit crunch this summer. The debt load of the company was said to be at the outer limits, leaving it with razor thin margins for slip-ups. But last week investors snapped up its $5 billion buyout loan. In fact, the loan was over-subscribed by about $2 billion.
Last night First Data said the deal had closed. First Data has gone private, and its stock has been removed from the New York Stock Exchange.
Earlier this month, the buyout firm behind the deal, Kohlberg Kravis Roberts & Co, was said to be in a nasty negotiation with the seven banks involved in arranging the First Data transaction. The banks had become nervous about massive loans on their books, and were pressing KKR to renegotiate its deal. KKR eventually did offer one concession—a leverage ratio financial test in its bank loans that has been described as “toothless” and “mere optics.”
While there are still questions about the financing—banks continue to look for ways to syndicate the nearly $24 billion in debt financing they committed to the deal—but fears that the credit crunch might derail the biggest deals, or leave a the financing banks with large losses, seem to be abating.

KKR completes $26 billion First Data takeover