First Data which was taken private by KKR is struggling under a...

First Data which was taken private by KKR is struggling under a $22B debt. Cashcard has around the same number of machine's as CUS. Beg's some questions 1) Is Cashcard suffering from capital investment as First Data tries to cut costs ? 2) Is Cashcard for sale ? 3) If it was for sale could CUS afford it ? 4) At what price would it be worth buying ? 5) Would there be any regulatory issues ? i.e dominant player with 40% market share ?

Business

FIRST DATA HAVING HARD TIME PAYING ITS DEBT

JOSH KOSMAN

437 words

5 February 2010

New York Post

NYPO

31

English

(c) 2010 N.Y.P. Holdings, Inc. All rights reserved.

First Data, the world's largest processor of credit card payments, is having problems processing the loans used to take the company private, and has forced out key executives in order to lower costs, The Post has learned.

According to an executive within First Data, Randy Roumillat, senior vice president of operations and technology, and Keith Shinn and Randall Gannaway, senior vice presidents of information technology, have left the company after being given a choice of relocating from Dallas to Omaha or resigning.

In addition, First Data International boss David Yates left at the end of January and is not being replaced.

"The people in the Dallas office were not given the option to move to the Atlanta headquarters," said the executive, who added the cuts hint at the possibility of the Dallas office being shuttered. "Giving them the option to move to Omaha was a slap in the face."

A First Data spokesman said the layoffs represent a very small part of the workforce, and added there were no plans to close the Dallas office.

"The previous [chief information officer] allowed people to work wherever they wanted and we have stated we are now repositioning the workforce," the spokesman said, adding that the senior VPs manage 4,000 Omaha-based workers.

"This is not about cost-cutting but about managing the company with more people in fewer locations."

The job cuts come as First Data tries to get a handle on the $22 billion in debt taken on when buyout shop Kohlberg Kravis Roberts took the company private in 2007.

"It was a very aggressive transaction predicated on strong credit card growth," said Eric Grover of Intrepid Ventures, a consulting firm focused on payment processing.

Now, thanks to credit card transactions falling for the first time in history, First Data finds itself facing a loss from continuing operations at a time when there are debt payments coming due.

The pressure is on KKR because it must first reduce First Data's debt-to-cash flow ratio enough to be able to take the company public, using proceeds from that offering to pay down debt, Grovers said.

To be sure, no one is suggesting First Data is on the brink of financial ruin. However, the company's decision not to replace its international head suggests a retrenchment at a time when some think the company should be expanding.

"Pre-LBO, First Data was always bidding for processing assets in different markets," Grover said. "If they had more money, they would invest to get in new markets."