First Data Corp. plans to consolidate data centers and shift work overseas as it prepares for its purchase by private equity firm Kohlberg Kravis Roberts, the payment processing company said Monday in a regulatory filing.
KKR is currently negotiating the financing terms for its $26 billion buyout of First Data later this month.
In the Securities and Exchange Commission filing, First Data laid out a cost-cutting plan that would consolidate its 12 data centers into three, and reduce to three from seven the command centers that oversee data operations in the next few years. No layoffs were announced.
The company also said it planned to consolidate centers outside the country but did not provide details.
First Data, based in Greenwood Village, Colo., anticipates taking a charge of between $125 million and $150 million to implement the changes, but expects to save at least $150 million by the end of 2008.
First Data spokesman Colin Wheeler declined to comment on the KKR negotiations Monday except to say the company expects the deal to close at the end of September.
The talks between KKR and the bankers in charge of financing the takeover are being watched closely by Wall Street. Investors are worried about large-scale debt offerings amid global market turmoil and tightening credit conditions.
In a related development, Fitch Ratings lowered First Data's credit ratings to junk status Monday after reviewing its expected structure after the buyout.
The agency downgraded First Data's long-term issuer default rating to 'B+' from investment grade 'BBB' and removed it from negative watch. The outlook is stable.
The actions reflect the company's higher debt obligations following the deal's closing.
Shares of First Data rose 5 cents to $33.60 in Monday trading.