Magazine article American Banker

Morgan, B of A, Citicorp Leading $10B Loan for Lockheed Buyout of Loral

Magazine article American Banker

Morgan, B of A, Citicorp Leading $10B Loan for Lockheed Buyout of Loral

Article excerpt

J.P. Morgan & Co., BankAmerica Corp., and Citicorp have won the lead on a $10 billion loan for Lockheed Martin Corp.'s acquisition of Loral Corp.

The loan is the second huge defense deal in a week. It supports Lockheed's $7.7 billion purchase, refinances some existing debt, and provides extra liquidity.

Last week, Northrop Grumman Corp. announced its $3 billion acquisition of Westinghouse Corp.'s defense business. Chase Manhattan Corp., BankAmerica, and Chemical Banking Corp. are leading a $4.8 billion loan for that purchase.

The two deals underscore the continuing consolidation in the defense and aerospace industries.

"There is excess capacity relative to the demand. You have to reconstitute part of the industry, because the cold war is over," said Peter Aseritis, a defense analyst at CS First Boston.

The Lockheed Martin deal will reach the bank market about a week earlier than the Northrop Grumman deal. Bankers said the deals would not be competing for investors.

The Northrop loan is "near investment grade" and is expected to have a price of approximately the London interbank offered rate plus 175 basis points.

The Lockheed deal will remain investment grade, and will probably have lower fees, including a single-digit up-front fee.

Bankers said a similar situation arose last summer, when a loan to Walt Disney for the acquisition of Capital Cities/ABC reached the market at about the same time as a loan to Westinghouse for the purchase of CBS Broadcasting Corp. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.