NXP Semiconductors is now worth $1.16bn, according to its private-equity owner Kohlberg Kravis and Roberts, after KKR wrote down its value by a further 80% this week following the 25% write-down it took in March last year.
When KKR bought 80% of the semiconductor manufacturer from Philips in late 2006, the company was valued at $11.6bn.
A statement from KKR co-founder George Roberts said: “We believe that we have positioned the companies in KPE’s portfolio well for an extended period of slower global growth by managing costs, anticipating refinancing issues and de-leveraging.”
Not in NXP’s case, they have not deleveraged. An leverage of $6bn worth of bondholder debt has been imposed on NXP requiring it to pay annual interest payments of $480m.
One option for KKR would be to pay off the bondholders at 10 cents on the dollar which would only cost $600m, not much more than one year’s interest, and allow NXP to get back to doing what it was doing before the KKR takeover.
That was running a debt-free semiconductor company in an industry where the companies traditionally run debt-free in order to cope with the excessive cyclicality.
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