Mountain of Junk Will Finance First Data Deal

WALL STREET – Private equity giant Kohlberg Kravis & Co. said yesterday it plans to issue up to $24 billion in debt, including $8 billion of junk bonds--the largest junk bond offering ever–to finance its leveraged buyout of payments processor First Data Corp. The junk bond financing will include up to $5.5 billion in senior unsecured notes and up to $2.5 billion in senior subordinated notes, according to a filing with the Securities and Exchange Commission. Up to now, the biggest junk bond issuance ever was the $6.1 billion floated by KKR in its $25 billion takeover of R.J.R. Nabisco, portrayed in the popular book and move by the same name, Barbarians at the Gate. The financing will also include a $14 billion senior secured term loan, a $2 billion senior secured revolving credit facility, and $7.2 billion of equity. First Data agreed in April to be taken private by KKR for a total of $29 billion, one of the biggest LBOs ever.