KKR Financiers Stuck With $10B in Loans
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Deutsche Bank AG, JPMorgan Chase & Co., and six more banks are stuck with 5 billion pounds ($10 billion) of loans for Kohlberg Kravis Roberts & Co.’s purchase of Alliance Boots Plc.
The banks will keep the senior loans after failing to find investors to buy them, said four people with direct knowledge of the deal, who declined to be identified because the information is private. The banks will sell 1.75 billion pounds of junior ranking loans, after increasing the interest rate and using their underwriting fees to discount the price by as much as 5%.
Wall Street firms, which had no trouble raising money for leveraged buyouts for the past five years, are unable to find buyers at prices acceptable to clients such as the co-founder of New York-based KKR, Henry Kravis. At least 35 companies’ borrowing plans were disrupted in the past five weeks, including the $12 billion of loans for Chrysler to finance its takeover by Cerberus Capital Management abandoned by bankers yesterday.
