by Calculated Risk on 9/13/2007 03:04:00 AM

From Bloomberg: First Data Loans Delayed as KKR, Banks Keep Talking, People Say

Kohlberg Kravis Roberts & Co. may delay the sale of loans to fund its $26 billion buyout of First Data Corp. until at least next week after failing to agree on terms with its bankers ...

KKR ... and banks led by Credit Suisse Group couldn't agree today on pricing or how much of the debt lenders will try to sell ...

Demand for LBO debt has evaporated. After buying a record $754 billion of leveraged loans this year, investors are balking at debt without covenants, or restrictions, that give them greater power over a company's finances.

by Calculated Risk on 9/11/2007 01:50:00 AM

From the WSJ: KKR Buyout Terms May Set the Standard

KKR ... agreed to make several concessions to bankers ... largely at the margins. That assured that market attention will remain focused on the $26.4 billion First Data leveraged buyout as the first and most important in a string of coming deals valued at about $400 billion.

First Data "is the canary in the coal mine. If it gets done, then another $350 billion is doable," says the co-head of private equity at one major Wall Street firm. "But if not, then the whole market may plunge, and the rest of the capital markets will react badly."

... KKR reached an agreement with its bankers to introduce one covenant ...on First Data debt ... Under the covenant, First Data ... must maintain a certain ratio of earnings before interest payments, depreciation, tax and amortization to its amount of senior debt ... people familiar with the matter say the ratio is modest.

... KKR declined to agree to increase fees to the banks to enable them to cut their losses on financing the $24 billion in debt. And more importantly for investors, KKR declined to agree to an increased interest rate on the loans. The concessions were sufficiently toothless, said one banker, to describe them as offering the banks "sleeves on the vest."