Harman Sale in Jeopardy?

KKR warns that it may need more bank loans

August 14, 2007

Highlighting how quickly the market for leveraged buyouts has turned, Kohlberg Kravis Roberts issued a revised filing for its coming public offering warning that it may not be able to tap the public markets to finance pending or future transactions. The most notable addition to KKR’s new IPO documents, updating those filed on July 3, were in the section detailing the risks related to its business, where it said: “The cost of financing leveraged buyout transactions by issuing high-yield debt securities in the public capital markets has recently increased significantly.

If conditions in the debt markets do not become more favorable to us in the near term, we may need to rely on financing commitments provided directly by investment banks or other sources.” The pushback in the credit markets comes at a particularly bad time for KKR, which has several large deals waiting on financing, including $37.35 billion for TXU, $24 billion for First Data and $5.15 for Harman International Industries.