First Data junk bonds soar on news of KKR-led $3.5 billion cash injection

By Paul A. Harris

Portland, Ore., June 19 – The entire suite of bonds issued by First Data Corp. soared Thursday on news that a group of investors led by KKR will purchase about $3.5 billion of the company’s common equity in a private placement, market sources said.

The First Data Holdings Inc.’s 14½% senior PIK notes due September 2019 were 111½ bid on Thursday morning, up from 106 bid on Wednesday night, according to a portfolio manager based on the East Coast of the United States.

The 11¾% senior subordinated notes due August 2021 were 115¾ bid Thursday morning, up from 113¼ bid on Wednesday night, the investor added.

A vote of confidence

“This is the big news of the day,” said the investor, who owns First Data bonds and who agreed to speak on background during a Thursday morning telephone conversation.

“FDC bondholders are happy,” the investor said.

“The company was over-leveraged and wasn't going to grow out of it completely on its own.

“So this is a vote of confidence in the new management.”

The $3.5 billion cash injection includes $1.5 billion from existing investors and $2 billion from new investors, including a diverse group of pension funds, mutual funds, asset managers and wealthy individuals, the company stated in a Thursday press release.

KKR provided about $1.2 billion, including $500 million from its 2006 Fund and $700 million from its balance sheet. Upon close of the transaction, KKR’s balance sheet will have approximately $1 billion invested in First Data’s equity, through general partner and limited partner interests, the release added.

The private placement follows the first year of leadership under chairman and CEO Frank Bisignano, during which the management team has implemented a comprehensive shift in the company’s vision for the future, corporate culture and client focus, transforming it from a payments processor to a collaborative solutions provider that partners with clients of all sizes, the release added.

© 2015 Prospect News.
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