KKR postpones IPO, announces $649m in write-downs for KPE

According to KKR’s Q3 earnings report, the parties remain committed to completing the transaction, which was originally announced in July of this year, although the deal is not now expected to close until 2009.

The report shows fair value write-downs of around $649m for KPE.

Under the terms of the deal, which was due to take place in the fourth quarter of 2008, KPE unitholders and related depositary units would receive equity interests in KKR, after which KPE will be dissolved and delisted from Euronext Amsterdam.

KKR said in a statement, ‘Global financial markets have experienced considerable declines in the valuations of equity and debt securities, an acute contraction in the availability of credit and the failure of a number of leading financial institutions during the second half of fiscal 2007 and through 2008 to date. Uncertainty regarding the value of assets and the ability of counterparties to meet their obligations, and a lack of transparency regarding the magnitude of risk inherent in certain investments, spread from the residential real estate market to financial markets generally. As a result, sources of liquidity may be not only more difficult, but also impossible to obtain in the current market environment.’

George R Roberts, co-founder of KKR and co-chairman of KPE’s managing partner’s board of directors, said, ‘As the decline in KPE’s quarterly NAV evidences, some of our investments faced reduced valuations during the third quarter as a result of the extraordinary turbulence in the global capital markets. We are redoubling our already extensive efforts to improve the operations of our companies in anticipation of a weaker economic environment.’

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