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KKR takes on Sat 1 debt

September 15, 2008

Kohlberg Kravis Roberts and Permira, the private equity owners of ProSiebenSat.1 Media, have acquired chunks of debt in the struggling German television broadcaster.

The debt purchases The debt purchases – about E100m by KKR's credit arm and Permira's debt subsidiary – are the latest examples of how, as the credit crunch has made it harder for private equity groups to secure debt for new buy-out deals and driven down the price of the loans issued for existing deals, the attraction of buying debt has increased.

KKR is believed to have acquired about €100m of first lien debt issued by the holding company of ProSiebenSat.1, which sits above the listed operating company and is secured on the private equity group's shares in the German broadcaster. The US private equity group made the debt purchase via KKR Fixed Income, its $18bn credit investment arm, at a discounted price of 70 cents in the euro.

Last year Bank of America, Credit Suisse, JPMorgan, Lehman Brothers, Royal Bank of Scotland and UniCredit sold on most of the debt used to finance KKR and Permira's E3.1bn purchase of a 50.1 per cent stake in ProSiebenSat.1.

However, critics argue that if a private equity group owns debt and equity in a company that runs into trouble, it might try to block other creditors from forcing a renegotiation of its loans.

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