Private Equity Firms Invest in ProSiebenSat.1 Debt

15 September 2008

MUNICH: Private equity companies Kohlberg Kravis Roberts and Permira have bought €100 million ($139.5m; £79.6m) of the debt of German group ProSiebenSat.1 Media, having acquired a 50.1% controlling stake in December 2006 for €3.1 billion.

KKR's purchase is thought to be considerably larger than that of UK-based Permira, and comes in the form of 'first lien debt', the highest priority liability in the event of any default. 

The private equity duo are said to have written off up to 80% of the value of their initial investment in the German media conglomerate, which recorded a 32% dip in profits and a 4% fall in sales in the second quarter of 2008. 

As well as selling assets such as pay-TV service C-More and Dutch holding Veronica TV Magazine, KKR and Permira are looking to reduce costs by €70m and to revamp the firm's advertising and management structures.

Observers suggest the deal is an example of private equity companies increasingly moving into debt purchases as the credit crunch limits their capacity to raise funds for new buyouts.

Data sourced from Financial Times; additional content by WARC staff