Private mart to get piece of Stephens buyout deal.

NationsBank is turning to the private placement market to absorb a portion of a $500 million underwriting commitment backing Stephens Group's planned purchase of Donrey Media Group.

Stephens, based in Little Rock, Ark., said late last month that it agreed to buy a "controlling interest" in Donrey but did not elaborate on the size of the investment, the purchase price, or how it would be financed.

Price Close to $1 Billion

But Stephens and its affiliates are said by sources to be buying all of the media company for nearly $1 billion.

A Donrey spokeman said Thursday that the companies would not comment beyond the original statement.

Sources said NationsBank's tactic of turning to the private placement market is aimed at stretching out the amortization.

Privately placed debt often carries longer maturities than banks are willing to accept.

There was also speculation that NationsBank might be skittish about trying to raise $500 million of acquisition debt solely in the bank loan market.

Depending on the level of interest coverage in the transaction, $500 million "could be a big swallow for banks," one media lender said.

The deal, though, is said to be conservatively structured, with roughly equal parts of debt and equity financing. Moreover, banks that specialize in lending to media companies have lots of liquidity because some big cable companies have been tapping the capital markets to pay off bank debt.

Depending on investor demand, the size of the private placement is expected to amount to around $100 million.

Remainder to Be Syndicated

NationsBank will syndicate the remaining $400 million or so in the bank loan market, beginning next month, sources said.

Pricing of the bank loan was not disclosed. But sources said the borrowing rate - far less than 200 basis points over the London interbank offered rate - further indicates that the deal is not highly leveraged.

Based in Las Vegas, Donrey owns 53 newspapers, five cable television systems, and 11 outdoor advertising plants.

Stephens, a holding company for the Stephens family of Little Rock, is the parent of the brokerage firm of the same name.

Jackson Stephens, the company's chairman, was a major financial backer of the Clinton presidential campaign last year.

Donrey, like Stephens, is privately owned.

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