Mumbai: Private equity firm Kohlberg Kravis Roberts & Co has agreed to renegotiate with banks a financing deal for its $26-billion leveraged buyout of payment processor First Data Corp, reports citing sources close to the development said.

The move comes amidst a credit crunch that has left banks with steep losses from holding on to unwanted debt arising from deals with private equity firms.

KKR has agreed to a performance criteria for First Data''s debt, a source familiar with the matter said. The firm had also agreed to maintain a certain level of earnings before interest payments, depreciation, tax and amortisation in relation to the senior debt, reports said.

While adding a covenant makes it easier for the investment banks to sell the debt to investors, such a move would be a major concession for KKR, which previously had been unwilling to budge on financing terms.

The banks on the First Data deal have claimed they would face losses of as much as $1.5 billion if the terms were not altered.

Adding a covenant puts greater pressure on KKR to meet the EBITDA standard and could mean lowering the returns expected from the deal.

KKR has offered to buy First Data for $34 per share. Despite the changes in financing terms, the market expects the deal to go through.

Credit Suisse and Citigroup are the leaders in arranging First Data''s $16 billion loan. Other banks on the deal include Deutsche Bank, HSBC, Lehman Brothers, Goldman Sachs and Merrill Lynch.

also see : General reports on Banks & Financial Institutions