Breakingviews editors discuss the LBO shop's $3.5 bln injection into struggling First Data and explain why, with KKR founder Henry Kravis on the board, there's more than just money at stake.
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Take hours leading a multi 1000000000 dollar investment this morning it may sound like a great deal that would in fact. They are getting involved in a company first full seven years ago and every capitalizing at least partly. Jeff giving this KK guys putting through a leading up million. Going into first. Takes this is really something I'm not I can't think of another example where private equity firm has guards. So headlong back into him seeing deal against the with the 29 billion dollar buyout 2007 that is not court Wheldon first data picked -- -- processing firm has not made money. At all in any quarter since that terrible it. -- you know it's saddled with debt. And they're piling more money into it and it's it's really an extraordinary story an interest in the news. Then Rudy -- fattening you to take us using its balance sheets it's not just -- thoughts. But it's about should I guess he has money themselves on the books out America if Tom that is the strength as you know it gives him an additional flexibility. It's something that most private equity firms do not have an effect -- -- phone. But it's of course -- -- pretty huge percentage of an. So yeah I mean look what's happened is right the it was a actually before the crisis yeah. Speak big but I haven't had a couple both of those chemicals that well -- I'm it's still alive the company is Brian but what has happened as the -- does not true at all yet and that whole time and they've yeah they've -- along the way it just hasn't. Grow and profit like release of a -- in the way that yeah I think they regularly gets the revenue that -- he's up about 50% since since taking shots against it. But and you just looking at the interest rates -- -- anything. Look where interest rates on African woman I am so that if things go well both of time to -- some drugs of the senior debt. -- kind of been the ratings are pretty low since it well this transaction is trying to do is take some of that that if the tabling for the equity. But if you think about it in the equity -- originally K Canada and put all of that in the -- is -- certainly -- the fight billions. Another equity I think they put some more in -- did -- And this is another big equity -- in which case you know I think about. -- maybe don't quite often but approaching half right now and we we don't yet know who the other investors though but it. You know it's a long running saga and they must this -- guys they must think that this'll get it. Plus that no such -- -- a receive a lot of these top of the market deals like this 1206 or seven vintage. Predators and we have managed to get out of them. You know with with so they've made they've double their money they've you know Ohio arts and the mid teens range they've kind of salvage themselves a little bit. This -- obviously -- -- has more work to do the institute also about this is how much can Carol really has -- stake not only have a pile more equity and it's. And taken money off their balance sheets do -- yeah. But Henry Kravis founder of the -- seven years old. Sits on the board and that's unique because the only US company for an oil company bears in particular. Where he sits on the so they -- -- his thing on the money and the irritation and Travis is reputations of -- woman sounds like that would. Jeff Richard thanks very much we'll be following that we'll be back -- -- breaking news tomorrow.