In the shadow of an unfriendly and overhung credit market, Sallie Mae shareholders approved a buyout last week that would add as much as $16.5 billion to the leveraged finance pipeline. But don't consider the deal closed just yet. In light of government subsidy cuts, the private equity group let it be known that they may scuttle the deal altogether. Are the buyers really looking for an out, or are they making noise to help squeeze a better deal from the beleaguered student loan provider?

The Reston, Va.-based company, also known as SLM Corp., agreed in April to a $25 billion buyout led by J.C. Flowers & Co. and including Friedman Fleischer & Lowe, JPMorgan Chase Bank and Bank of America. J.C. Flowers and Friedman Fleischer & Lowe agreed to invest $4.4 billion and own 50.2% of the company, and JPMorgan and Bank of America agreed to each invest $2.2 billion and own 24.9%.

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