Published in CFO World
Have the LBOs of the mid-2000s primed a financial time bomb? Sally Percy reports
If you have a leveraged buyout (LBO) loan that is set to mature between now and 2016, form an orderly queue. According to business research company Dealogic, some $2 trillion of loans need to be rolled over globally, including $550 billion in Europe.
These astonishing numbers are the legacy of the LBO boom in the run-up to the 2008 financial crisis, when private equity firms bought companies by using the assets of the acquired company as collateral for borrowing. Some of the best known examples include the £11.1 billion purchase of FTSE 100 health and beauty group Alliance Boots by KKR, and Terra Firma’s ultimately doomed £4.2 billion acquisition of music company EMI, both in 2007.