U.S. Foodservice LBO Financing Cancelled ; Beginning of the End to the LBO Boom?

Investor pushback has hit the LBO bond market, as underwriters for U.S. Foodservice pulled a $1.55 billion LBO bond offering and postponed plans to sell another $2 billion in loans to finance the buyout.  Two private equity firms are acquiring the company from Royal Ahold NV.  Investors are putting up resistance to some of the terms in LBO deals, particularly payment-in-kind features that allow the borrower to make interest payments in more debt instead of cash.  See WSJ, Bonds Becoming a Tougher Sale.