KKR Pumps $1.2 Billion Into Struggling Payment Processor First Data; Firm Has Been in the Red Since Its $26 Billion Leveraged Buyout in 2007
KKR & Co. pumped $1.2 billion into First Data Corp., an unusual move showing that its debt-fueled takeover of the payment processor seven years ago remains a burden for the buyout firm.</br></br>Credit-card processor First Data has been in the red since KKR took it over in 2007 for roughly $26 billion in one of the largest-ever private-equity buyouts. For a while, KKR refinanced First Data's hefty debt load to ease pressure on the company. Now, it is injecting equity as part of a $3.5 billion investment that includes $2 billion from pension funds, mutual funds, asset managers and wealthy individuals, KKR said Thursday. The total investment, among the largest of its kind, gives First Data a boost as it tries to rebound from previous losses and reshape its business.</br></br>KKR will invest $500 million from its fund that did the original buyout and another $700 million from its own cash, or balance sheet, the firm said.</br></br>Private-equity firms rarely put additional cash into a company they have bought years after closing the deal. Instead, these firms--which buy companies largely with borrowed money--often pay themselves by having the company borrow more money. Owners eventually try to sell companies or take them public. In the past couple of years, with stocks on the rise, conditions have been ripe for private-equity firms to sell out of investments they have held for years, including some stragglers.</br></br>But KKR hasn't been able to shed Atlanta-based First Data, which was weighed down by an outsize debt load taken on in the takeover. Thursday's deal gives First Data, which employs about 23,000 people and processes credit-card and debit-card payments for merchants and banks, additional cash to reduce by $375 million its annual interest payments on debt, KKR said.