DENVER – Costs to finance last year’s $27 billion acquisition by Kohlberg Kravis Roberts & Co. of First Data Corp. pushed the transactions processing giant into the red to the tune of $273.2 million for the fourth quarter of 2007, the company reported last night.
Fourth quarter financials include $550.1 million in charges, mostly interest, to finance the huge takeover. First Data reported a $460.8 million profit for the same period in 2006 before the takeover.
The losses appear as the latest sign of trouble for KKR, the kings of the corporate buyout, following last fall’s infusion of $270 million to bail out one of the partnership’s mortgage funds. KKR founders Henry Kravis and George Roberts personally injected cash into the fund to keep it from going under.
Other private equity funds are experiencing similar difficulties in the ongoing credit squeeze. Earlier this week, Carlyle Group, the private equity partnership that acquired credit union outsourcer Open Solutions last year, was forced by creditors to liquidate one of its mortgage funds, a $21 billion fund known as Carlyle Capital Corp.
And the Blackstone Group, another equity fund that backed out of a deal to acquire credit union mortgage bank PHH last year, reported a $170 million loss for its fourth quarter.
First Data said despite the slowing economy, consolidated revenues rose 11% in the fourth quarter, to $2.1 billion, and by 14% for the year, to $8.1 billion.
For the full year, First Data reported net income from continuing operations plunged 80% to $163 million, due to $720 million in takeover-related costs.
Because First Data is now a private company it generally is not required to report its financials publicly, but the $26 billion in debt used to finance the deal is publicly traded, thereby obligating the public disclosures.
