Magazine article American Banker

AT&T Raising $8 Billion Line as NCR Backup

Magazine article American Banker

AT&T Raising $8 Billion Line as NCR Backup

Article excerpt

AT&T Raising $8 Billion Line As NCR Backup

AT&T Corp. is lining up $8 billion in backup credit in case regulators disallow its planned $7.4 billion stock swap for NCR, bankers familiar with the deal say.

The new borrowing facility, which replaces AT&T's current $7.5 billion in multiple commitments from banks, is the largest single credit line to be arranged since the 1980s.

If AT&T is forced to finance the transaction partially with cash, it is unclear whether the company would draw down the facility or use it to back an issue of commercial paper. All commercial paper programs require bank credit lines in case the borrower is unable to meet an obligation.

If the Securities and Exchange Commission permits the planned tax-free swap, AT&T is expected to reduce the facility to $5 billion, using the funds to provide working capital and for general corporate purposes.

Chemical Banking Corp. is sole agent on the new bank line, and some agents on the existing lines are expected to be named agents on the new facility. A Chemical spokeswoman declined comment.

If the stock swap isn't allowed, AT&T's borrowing unit said in its latest 10-Q filing with the Securities and Exchange Commission, "the merger will be converted to a cash election merger and would be accounted for as a purchase." If that occurs, AT&T would purchase 40% of NCR's shares with roughly $3 billion with cash and the remaining 60% with AT&T stock, at $110 per share.

Under the cash-stock package, depending on the stock price of AT&T, NCR holders will receive between 2. …

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