KKR in $24B loan tussle
Just days after the credit crunch hurt a Home Depot deal, private equity giant KKR is in talks with banks over terms of its looming buyout of First Data, according to a report.
August 30 2007: 6:38 AM EDT
NEW YORK (CNNMoney.com) -- Kohlberg Kravis Roberts is in talks with major Wall Street banks over the $24 billion loan it needs to complete a deal for First Data Corp, according to a report Thursday.
The private equity firm has invited financiers such as Citigroup, Deutsche Bank and Goldman Sachs to its offices to negotiate terms of the deal, said the Wall Street Journal on its web site.
Signs that the terms of KKR's First Data buyout may change come less than a week after the credit crunch forced Home Depot to reduce by $1.8 billion the sale price of its wholesale supply firm to private equity investors.
During the recent private equity boom, banks pledged billions of dollars to help finance acquisitions. But some deals may be at risk now that investors, worried about the health of the economy, are no longer as willing to buy the debt from the banks. Banks, in turns, are concerned that their profits may fall.
One of the main points of negotiation in the KKR-First Data deal is whether banks will keep the debt on their own balance sheets or sell the debt to investors, according to the Journal.
KKR has been one of the most aggressive private equity firms on the Street, buying firms at a 10 to 15 percent mark-up, said the Journal. In all, the company has brokered $140 billion worth of deals this year.
The firm is also looking to go public, but the sudden private equity slowdown has raised doubts about its planned IPO.
KKR has offered $34 a share for First Data, an electronic commerce company.
Shares of First Data (Charts, Fortune 500) closed Wednesday at $32.73 on the New York Stock Exchange.
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