Magazine article American Banker

Disney Co. Auditioning 5 Banks for Buyout Loan

Magazine article American Banker

Disney Co. Auditioning 5 Banks for Buyout Loan

Article excerpt

Walt Disney Co. has asked five banks to pitch financing proposals later this month for its $19 billion acquisition of Capital Cities/ABC Inc.

Bankers familiar with the situation said Disney will listen to separate proposals from BankAmerica Corp., Bankers Trust New York Corp., Citicorp, Chemical Banking Corp., and Credit Suisse during the week of Aug. 21.

The Burbank, Calif., entertainment conglomerate probably will select lead lenders from that group by Labor Day, bankers said. But they did not rule out other banks being invited to make proposals.

Disney officials are "exploring all their options at this point," said Jill S. Krutick, a media analyst at Smith Barney Inc.

Ms. Krutick said the expectation is that the company would borrow about $10 billion for the acquisition. The combined company will "take on debt to potentially the 50% range, which would result in a little less flexibility than they had, but certainly more flexibility than their competitors," she said.

Bankers said the size of the bank facility could be anywhere from $5 billion to $10 billion, depending on how the bankers propose to structure a deal. It is likely to be a backup line for Disney, which is in a good position to raise money in the commercial paper market.

Although pricing on the investment-grade credit is expected to be thin, bankers are eager to participate, in part to get a leg up on offering other financial services to the huge company.

"Clearly the market view is that this company will have little difficulty raising the amount," said one banker. "This is a great franchise. They will have little difficulty attracting favorable terms."

The Disney loan could be the biggest loan to result from a consolidation of the media and entertainment industry since the $14 billion loan that allowed Time Inc. to buy Warner Communications in 1989.

Word that the Disney financing is moving forward comes shortly after J. …

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