KKR & Co LP secured the most affordable borrowing interest rates it ever got to finance a leveraged buyout. Several banking sources said that the low rates could save the private equity firm from the millions of dollars of interest it would have to pay to fund its US$3.9 billion takeover of Gardner Denver Inc.
Most of the markets are no longer fearful that Bernanke's Federal Reserve would conclude its economic stimulus program too soon, the bankers said. The market atmosphere allowed the private equity firm to borrow around US$2.5 billion in loans and to issue a further US$575 million in bonds for the upcoming deal at an average combined interest rate of 4.8%. The bankers said that this 4.8% KKR secured was one of the lowest interest rates ever seen in a leveraged acquisition.
"KKR's Gardner Denver execution is the tightest large cap single B leveraged buyout financing ever done as measured by total average cost of debt. Pretty amazing considering the volatility we faced during the loan and bond syndications," UBS AG global head of leveraged financing, Brendan Dillon, said.
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