Mumbai:
Private equity firm Kohlberg Kravis Roberts & Co has agreed to renegotiate
with banks a financing deal for its $26-billion leveraged buyout of payment processor
First Data Corp, reports citing sources close to the development said. The
move comes amidst a credit crunch that has left banks with steep losses from holding
on to unwanted debt arising from deals with private equity firms. KKR
has agreed to a performance criteria for First Data''s debt, a source familiar
with the matter said. The firm had also agreed to maintain a certain level of
earnings before interest payments, depreciation, tax and amortisation in relation
to the senior debt, reports said. While
adding a covenant makes it easier for the investment banks to sell the debt to
investors, such a move would be a major concession for KKR, which previously had
been unwilling to budge on financing terms. The
banks on the First Data deal have claimed they would face losses of as much as
$1.5 billion if the terms were not altered. Adding
a covenant puts greater pressure on KKR to meet the EBITDA standard and could
mean lowering the returns expected from the deal. KKR
has offered to buy First Data for $34 per share. Despite the changes in financing
terms, the market expects the deal to go through. Credit
Suisse and Citigroup are the leaders in arranging First Data''s $16 billion loan.
Other banks on the deal include Deutsche Bank, HSBC, Lehman Brothers, Goldman
Sachs and Merrill Lynch.
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