KKR writes new check to help First Data refinance debt


NEW YORK, Oct 14 (Reuters) - Private equity firm KKR & Co LP and its co-investors, which took First Data Corp privatefor $29 billion in 2007, are making a new $300 millioninvestment in the world's largest payment processing company tohelp it refinance its debt.

KKR and other small shareholders will receive newconvertible preferred equity in First Data in return for their$300 million cash investment, First Data said in a statement onMonday.

The cash will be used, along with $1.4 billion in new seniorpayable-in-kind (PIK) notes with a 14.5 percent coupon due 2019,to retire most of First Data's $2 billion of 11.5 percent seniorPIK notes due 2016.

Frank Bisignano, a former co-chief operating officer forJPMorgan Chase & Co who was brought in earlier this yearto run First Data, said the latest deal meant that thematurities of most of the company's debt that dated back to 2007had been taken care of.

"While the company has successfully extended the maturitiesfor some $21 billion of debt through the second quarter of thisyear, this agreement allows us to address the junior-most of thedebt structure and an element that has been of interest toinvestors," Bisignano said in the statement.

One of the mega leveraged buyouts that came to epitomize thecredit binge that preceded that 2008 financial crisis, FirstData has proved to be a challenging investment for KKR, whichvalued it at 70 cents on the dollar as of the end of June.

KKR and its co-investors invested $7.2 billion as equity inthe company in 2007, according to regulatory filings.

"Fitch believes this refinancing is a modest positive forthe credit by opening up a path to further extend the company'scapital structure... The end result is essentially a viablefive-year-plus runway for the company to grow out of itscurrently highly levered capital structure," the credit ratingagency said in a note on Monday.

Since he was named CEO of First Data in April, Bisignano hastaken a number of steps to improve profitability, includingboosting the proportion of employee compensation that is paidout in stock, a move that Fitch expects to save the companyabout $60 million in the first year.

First Data's biggest challenge is increasing its cashflow tosignificantly pay down debt. Before bringing Bisignano onboard,the company explored selling its financial services business toraise cash, but then dropped the idea, people familiar with thematter said at the time.

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