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Here Come The Credit Peak LBO IPOs: KKR's Dollar General Files S-1

Courtesy of Tyler Durden

The LBO to IPO bait and switch is here: bull market in full glory.

Oh, and the dividend cash out is not far behind:

We have no current plans to pay dividends on our common stock in the foreseeable future. However, we anticipate paying a special dividend of approximately $200 million to our existing shareholders prior to this offering. This dividend will be paid with cash generated from operations.

Just a reminder, KKR completed the LBO in March 2007 for $22/share, a $7 billion purchase price. At the time, the transaction was marketed off an adjusted LTM EBITDA of $659 million (without a variety of Pro Forma adjustments, the EBITDA was $425 million). KKR, Goldman and Citi funneled $2.8 billion in equity into the transaction, while levering the company up to $4.7 billion.

The prospectus now lists LTM EBITDA as $933 million, on $5.2 billion of debt (including a fully drawn revolver), meaning that the EV/EBITDA valuation will have to be well over 7x for KKR to be in the money. Then again with this market, a 10x multiple of a discount retailer should be equity easily doable.

The company’s S-1 can be found here.


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