ATLANTA – Payments processing giant First Data Corp. reported this morning that huge debt incurred from the 2007 buyout of the company by private equity firm Kohlberg Kravis Roberts & Co. continues to weigh heavily on its bottom line, creating a $431.3 million loss for its third quarter, even while revenues continued to rise, increasing a strong 8% in the period.
Debt service incurred in the $27 billion takeover continues to push down profitability, even as the company reports solid growth. First Data reported a 2% rise in third quarter interest expenses to $455.8 million, and a 1% rise in interest costs for the first three quarters of the year to $1.36 billion–creating a $842.6 million loss for the first nine months of the year.
At the same time, revenues for the first nine months surged by 14%, to $7.65 billion.
Debt service incurred from the huge takeover created a $1.1 billion loss for 2009 and a $3.8 billion loss for 2008.
“Our management team is committed to continuing to grow this business organically and profitably by putting the customer first, introducing innovative products, and achieving operational efficiencies across the organization,” said Jonathan Judge, the company’s new CEO, the third executive to head the processing giant in the past year. Judge, the former chief of Paychex Inc., recently succeeded Joe Forehold, who remains as chairman of the First Data board, and who succeeded Michael Capellas, the one-time CEO of MCI, who departed in May to take a top post with the parent KKR.
First Data provides cards and electronic transactions processing for thousands of credit unions and is the parent of the STAR EFT network. The 2007 buyout was one of a dozen major takeovers on 2006 and 2007 that remade the landscape for back-office services for credit unions and banks, with buyouts of such well-known credit union vendors as Open Solutions Inc., Digital Insight, John H. Harland Co., CheckFree, eFunds and Corillian.
