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Here Come The Credit Peak LBO IPOs: KKR's Dollar General Files S-1
The LBO to IPO bait and switch is here: bull market in full glory.
Oh, and the dividend cash out is not far behind:
We have no current plans to pay dividends on our common stock in the foreseeable future. However, we anticipate paying a special dividend of approximately $200 million to our existing shareholders prior to this offering. This dividend will be paid with cash generated from operations.
Just a reminder, KKR completed the LBO in March 2007 for $22/share, a $7 billion purchase price. At the time, the transaction was marketed off an adjusted LTM EBITDA of $659 million (without a variety of Pro Forma adjustments, the EBITDA was $425 million). KKR, Goldman and Citi funneled $2.8 billion in equity into the transaction, while levering the company up to $4.7 billion.
The prospectus now lists LTM EBITDA as $933 million, on $5.2 billion of debt (including a fully drawn revolver), meaning that the EV/EBITDA valuation will have to be well over 7x for KKR to be in the money. Then again with this market, a 10x multiple of a discount retailer should be equity easily doable.
The company's S-1 can be found here.
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With 13.3% same-store-sales growth in Q1'09 and a recapitalized balance sheet, I'd say 10x is about right. What other retail companies do you know have sales growth?
A recapitalized balance sheet? Do you mean since KKR loaded it up with billions in debt when they took it private in 2007?
Jim Cramer gonna tout this all day. Blah.
Stealing from idiots...perhaps that should be the name of the definitive book of this period when all is said and done.
By the way, Andy, I have that scene at the end of the movie, when Andy with arms upraised has all the shit he has crawled through washed away stuck in my head, as the definitive screenshot when the crash finally comes.
Your funny Andy.
Your funny Andy.
TD, not sure how much cash is on the books
but with LTM EBITDA at $933 million and an 8.6x multiple
then the scumbags get their $2.8 billion back.
This of course doesnt include their special dividend and whether
they were paying other special dividends. What a great business
to be in financial engineering and leveraging.
problem with the Ka-Poom is that it assumes "incompetence yet benevolence" on the part of the
my newest bookmarked finance site ..http://www..
hat tip: finance news & finance opinions
How do you figure? They will net $750mm in proceeds from the IPO which will all go towards paying down debt? They won't get ALL their money back. Not just yet as least.
Oh my god, I swear, listening to my companies investment meetings are like listening into a group of high school geeks playing dungeons and dragons....
They're completely separated from reality.
Well my 15 p/e is lower than the industry average, but I also have a 6x growth rate in comparison to your 4x, additionally my leverage is only at 32% allowing me to add leverage and if I roll a 20, I get a 2x bonus to earnings!
Wtf?
Oh ps... I was one of those geeks :)
My favorites are the production improvement projects...
project manager "we decreased errors in production of data by 46%",
me "how?"
project manager "alot of the quantifiable data error sets were outside the parameters of the job as we defined it"
me "so let me get this straight, you changed the definition of what an error is, took credit for it and charged my department"
Scott of Dilbert fame, may yet become more than the unofficial management Guru of the 21st century - but first some of the Analytical Nihilism he has needs synthesis mode thinking 'Creative' 'Constructivism' comes to mind
please....no more crazy !! its bad enough punting aussie dollars in 3 timezones without this
paragraphs to make the point of the issue. The chart provided by CIGA Eric covers several important types of US$-based bonds
my newest bookmarked finance site ..http://www..
hat tip: finance news & finance opinions
I predict all loans to AIG will be forgiven. Why, ask Obama.
did not the head of AIG in Congressional testimony say as much - the USA should take over 100% of the credit default swap insured, thus making whole, or else...well was it $140 billion now Government 'quarantined' and protected yet the too big to fail thing all over again - why wasn't THAT settled back in 1984, when the Manufacturers Hanover Bank, once one of the Big Seven, THEN, came to failure, and was quietly, very, very quietly 'saved' by the USA government/federal reserve (private bank) this is the MINDSET of such people - who, hence are useless eaters at this point and need to be liquidated Stalin style - but no problem, they, he are all, already starting to serve a life sentence, parolee, whom NOWHERE on this earth will they ever again feel 'safe' feel that they might not be in someones 50 caliber day/night sight at 1400 yards...
Post Script and additions to comments - such people are NOT repeat NOT 'Capitalists' they are quite simply 'criminals' and under USSR law, prosecutable, and subject to under Chinese law, DEATH for crimes against the people - repeat CAPITALISM, the systematic de-risking of venture business, is GOOD GOOD good, simple and plain - this is another honey pot offering, for you FBI would be, wanna be busy bees
Lovers of liberty and auditing the FED. Please throw some
change at Dr. Rand Paul who is running for KY Senate seat.
http://www.randpaul2010.com/
This IPO is as good as any event to mark the top for discount retail.
Dollar General looks bad. Check out Texas Competitive Electric Holdings (TCEH) and EFH. KKR owns them. They're sitting on $40 billion due 2014. EBITDA from TCEH as far I can tell is $1 billion annually. What a disaster.
I am as bearish as anybody on this site but we spent some time on this credit today and it is actually a hell of a well-run company that has kicked ass since its 2007 LBO. I'm sure the push to IPO it is a wilful attempt to rip off equity market lemmings, but you can't blame KKR for buying the company in the first place, or bond or bank debt investors for financing it.
Remember Blackstone's IPO in Mar 2007 and how it made the founders disgustingly rich?
Well, the peak for this absurd period would come when KKR itself goes IPO at $100 billion valuation with China taking a strategic 20% stake, making henry kravis a richer man than Blackstone founders and Tim geithner, after being dumped by the talking presidente, becomes the executive director. Six months after that, we'll see the mother of all bears. Of copurse I won't be stuped enuf to hazard a time frame, the Gold-plated folks would make sure it doesn't happen, just like the way they skillfully have defied all the predictions of technicals pronounced so far for all stock markets. And that includes the manipulation of the Chinese and HK rebounds yesterday. The commies had better watch out, the octopus grip is all around them now.
RailAmerica, a Fortress deal, filed its S-1 in late July. Healthport, an ABRY deal, filed its S-1 a couple days ago. Dole Food Company was an MBO that filed its S-1 last week.
The banksters are going to flood the market with LBO sponsored IPOs this fall. Are investors really going to fall for this scam again?
i dont touch common stocks, but they're so entertaining. a quick look at the tombstones ... yes, our tax dollars at work. what a truly inspired racket.
i dont know, has an LBO/IPO issue ever failed? i guess that would qualify as a green shoot of a return to reality. but that's not likely.
Now that the Private Equity guys have permission to get into banking and commercial banking can now be investment banking, the obverse of what most think happened, the ultimate in vertical financial integration is at hand. No more KKR begging the banks to fund the latest LBO. Sudden cut offs of funding for target companies. Piece of cake. It's a beautiful thing.
Anyone have a chart or record of how KKR deals have faired? As they are astute market timers, would be great to see deals in the past vs the S&P for example. Thanks.