By Weiner, Lisabeth
American Banker , Vol. 150
CHICAGO -- It appears that the Union Carbide Corp. will be paying a fairly high premium for the $1.5 billion credit facility it arranged to help finance the repurchase of some of its stock.
Union Carbide's repurchase offer is a two-step plan designed to thwart the unfriendly takeover bid made by the GAF Corp. last week.
The first step of the offer calls for Carbide to repurchase 23,550,000, or 35%, of its outstanding shares for $20 in cash and $65 in securities each -- for a total value of $2 billion. However, if GAF were to increase its holdings in Carbide to 30% from its current 10%, Carbide would then repurchase the remaining 35% of its stock at the same price.
In an offering circular, the company said it will pay interest at the prime lending rate plus one percentage point on the first 23,550,000 shares tendered. If more than that number of shares are accepted in an exchange for cash, the interest rate will be prime plus two points for all borrowings.
Additionally, the facility carries a commitment fee of one-half of 1% on the unused portion of the pact and a drawing fee of one-half of 1% on the portion of the credit agreement that is available for the purchase of more than 23,550,000 shares if that becomes a reality.
Morgan Guaranty is the agent bank on the agreement. The other participants are Continental Illinois National Bank and Trust Co., Bank of America, Chemical Bank, Manufacturers Hanover Trust Co., Credit Suisse, Mellon Bank, Bankers Trust Co., First National Bank of Chicago, and Chase Manhattan Bank.
As part of the financing arrangement, Union Carbide has agreed to pay certain other fees totaling up to $25 million to Morgan Guaranty and the banks in the facility. …