Magazine article American Banker

Banks Race to Market with CBS Buyout Loan

Magazine article American Banker

Banks Race to Market with CBS Buyout Loan

Article excerpt

J.P Morgan and Chemical Banking Corp. wasted no time coming to market with their $7.5 billion loan to Westinghouse Electric Co. for its acquistion of CBS.

One day after the purchase was announced, the lead banks started seeking commitments from other banks to underwrite one of the largest leveraged finance deals since the heyday of LBOs in the late 1980s.

A dearth of blockbuster deals in noninvestment-grade credits has given Westinghouse a chance for cheaper pricing. "The market for this type of transaction is very attractive right now," said Fred Reynolds, the chief financial officer at Westinghouse.

Bankers say they are eager to finance the deal at relatively cheap levels, because they still secure better fees than they would from an investment-grade transaction.

"Right now, we are finding everybody across the board is pretty asset hungry," said a banker. "If you're going to be distributing a large loan, now is an excellent time."

Industry experts dismissed the notion that Westinghouse and its banks are rushing to enlist banks before Walt Disney & Co. seeks financing for its $19 billion acquisition of Capital Cities/ABC Inc.

The investment-grade Disney company will attract a different group of bank lenders, bankers said, and may ultimately be smaller than the Westinghouse deal if Disney pays for its transactions through other means.

"I don't think we'll be going to the same market as the Disney deal," said Mr. Reynolds. "We'll be using largely bank financing because we believe cash flows and asset divestitures will be quick, whereas I'm sure Disney is looking to the bond market and commercial paper."

Mr. Reynolds said he was pleased with his lead banks, and cited Chemical's James B. Lee Jr. for his long-term help in putting various deals together.

Morgan has served as Westinghouse's adviser on the CBS acquisition. …

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