Magazine article American Banker

2Q Earnings: First Data Sees No Bar to KKR Deal's 3Q Closing

Magazine article American Banker

2Q Earnings: First Data Sees No Bar to KKR Deal's 3Q Closing

Article excerpt

First Data Corp. said its sale to the New York private-equity firm Kohlberg Kravis Roberts & Co. is proceeding smoothly and is on track to close this quarter.

Henry C. "Ric" Duques, the Denver payment processor's chief executive, said during a second-quarter earnings call Friday (probably its last) that "committed bridge financing has been secured for both the debt and equity portions of the transaction." But he also said the merger agreement "is not contingent upon debt or equity financing."

On April 1, First Data agreed to be acquired by KKR for about $29 billion, or $34 a share in cash. A special shareholder meeting is to be held July 31 in New York to vote on the bid.

Mr. Duques also said he anticipates no regulatory delay.

He addressed a question that remains up in the air - the potential termination of the company's merchant acquiring and processing alliance with JPMorgan Chase & Co., called Chase Paymentech Solutions LLC. There has been speculation that JPMorgan Chase, which has majority ownership in Chase Paymentech, might buy out First Data's stake in the alliance. In this scenario, First Data would probably continue to process transactions for the company but as an outsourcer.

In the event of a termination of First Data's largest equity alliance, "our reported revenue would increase and our reported profits would stay the same," Mr. Duques said.

Lawrence S. Berlin, an analyst at First Analysis Securities, said the call's highlight was the clarification that the KKR deal's closing is not "contingent on financing."

"With the slight slowdown in the debt financing markets, it's a little bit harder to get a deal done," he said. "The terms of the debt have become a little bit more onerous for the private-equity buyer."

Mr. Duques, who was the CEO of First Data twice, from 1989 to 2002 and from November 2005 to the present, also welcomed Michael Capellas, who was named this month to succeed Mr. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.