ATLANTA — Payments processor First Data Corp. reported Tuesday morning that debt service related to its huge 2007 leveraged buyout by Kohlberg Kravis Roberts & Co. continues to leave it in the hole, with third quarter losses increasing another 4% to $220 million and losses for the first three quarters rising 43% to $746 million.
The continuing increase in debt service erased revenue gains of 1% for both the third quarter and the first three quarters of the year.
The losses come as debt service on the $29 million LBO, one of the biggest ever, declined slightly in the third quarter to $469 million, and to $1.4 billion for the first nine months, the company reported.
Contributing to the increase in third quarter loss was a $7.8 million restructuring charge as the company refinanced its debt again, and a $16 million decline in other income.
First Data reported last week it was retiring most of the $2 billion outstanding of 11.5% percent senior payable-in-kind notes due 2016 with a $300 million cash infusion from KKR and new senior PIK notes with a 14.5% coupon due 2019.
Frank Bisignano, a former co-chief operating officer for JP Morgan Chase who was hired to run First Data earlier this year, said the latest refinancing means that the maturities of most of the company's debt that dated back to the 2007 LBO has been taken care of. "While the company has successfully extended the maturities for some $21 billion of debt through the second quarter of this year, this agreement allows us to address the junior-most of the debt structure and an element that has been of interest to investors," Bisignano said in a statement.
Debt service on the huge LBO has continued to vex KKR and its investors since inception of the deal, with the well-known buyout firm valuing its stake at just 70 cents on the dollar at the end of June. KKR and its co-investors invested $7.2 billion as equity in the company in 2007.
