First Data Says Cuts will Save $150 million

Giant payments processor First Data Corp. (NYSE: FDC) today reported it plans to save as much as $150 million annually by outsourcing jobs, cutting vendors, and consolidating operations. The announcement comes as bankers seek to complete financing for a $26 billion leveraged buyout of the company by Kohlberg Kravis Roberts & Co.

First Data reported in a U.S. Securities and Exchange Commission filing it would reduce spending, consolidate business units, combine offices and data centers, and outsource some of its 6,600 technology jobs. First Data said it also would reduce the number of vendors it works with.

Also today, Fitch Ratings cut its ratings on First Data debt to junk status as the takeover appeared to move forward.

First Data and its bankers are meeting with investors today to sell a $5 billion term loan to finance the takeover, according to the Reuters news service today. The purchase of the processor has been threatened by the contraction in the loan market as bankers react to the crises in the subprime mortgage market.