At least one ratings agency has approved a move by private equity firm KKR & Co. and other investors to inject another $300 million into First Data Corp., a major payments processing firm used by both credit unions and banks.
KKR and other investors took the payments processor private for roughly $30 billion in 2007, according to press reports at the time.
Atlanta-based First Data has never said exactly how many financial institutions process card payments with the firm, but industry experts estimate between 500 and 1,000 credit unions are First Data clients.
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The additional $300 million will help the company restructure its debt, the firm said in a statement.
First Data said Oct. 14 that KKR and other investors will receive new convertible equity in First Data in return for their $300 million cash investment, and that the cash will help retire most of First Data's $2 billion in 11.5% debt due in 2016.
Frank Bisignano, CEO of First Data, said the latest deal meant that the maturities of most of the company's oldest debt had been addressed.
"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 the statement.
The move has received the approval of at least one of the ratings agencies, as well. Fitch Ratings wrote in a statement released on Monday.
"Fitch believes this refinancing is a modest positive for the credit by opening up a path to further extend the company's capital structure," Fitch Ratings said Oct. 14.
"The nearest significant maturity for the company is the aforementioned $1.75 billion in subordinated notes due 2016. In 2017 and 2018 the company has various portions of its secured term loans set to mature, which Fitch views as being easier to refinance given their position in the capital structure. The end result is essentially a viable five-year-plus runway for the company to grow out of its currently highly levered capital structure," the ratings agency said.
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