Perfect storm for tech?

July 26, 2007

storm1.jpgCan the market swallow $135 billion of leveraged buyout financing for technology, media and telecom (TMT) deals?

In a research note, entitled “Is TMT facing the perfect storm?”, investment bank Goldman Sachs says it expects LBO financing needs of that amount from the TMT sectors over the next six to nine months.

With investors spooked by mounting defaults and the stock market plunging, there are worries about LBOs on the table getting completed across the board. Postponements of $22 billion in debt offerings to finance buyouts of U.S. automaker Chrysler and British pharmacy chain Alliance Boots haven’t helped concerns.

This is the breakdown Goldman Sachs gives of the pending calendar of LBOs and the total funding (below). “As a result of the sheer magnitude of these deals, we believe spreads for most TMT companies could be pressured for the remainder of the year – especially those with higher leverage,” the GS note read. 
   
    Company– Total funding
    Alliance Data– $6.6 billion
    First Data Corp– $24 billion
    Avaya– $8.2 billion
    Tribune– $4.2  billion
    Alltel– $23.2 billion
    Clear Channel– $22.1 billion
    Intelsat– $5.1  billion
    BCE– $25   billion
    Cablevision– $15.5 billion

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