Barron's: High noon for First Data

The 18% haircut on Home Depot's (NYSE: HD) sale of its supply unit was not much of a surprise. Real estate continues to ail and the credit crunch added to the pressures. But the big test for private equity is the upcoming $29 billion buyout of First Data Corp (NYSE: FDC).

Well, Barron's [a paid publication] has an excellent analysis on the deal, which will require a whopping $24 billion in debt financing and is expected to close at the end of the month.

So, will there be pushback from the lenders -- which include Citigroup (NYSE: C), Credit Suisse (NYSE: CS), Lehman Brothers (NYSE: LEH) and Merrill Lynch (NYSE: MER)?

Keep in mind that First Data already has a sizable debt load. The pricing on the new debt could sustain a material discount. If so, the lenders may need to take a write off or sell loans at a loss.

For example, First Data's interest payments may eat up most of its free cash flows. And, if the growth slows down, there could be negative cash flows.

In a restrained credit environment, this is not what lenders want to hear. In other words, I think we could see some fighting from the lenders to try to get a lower price on this deal.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.