Syndication of a $1.4 billion revolving credit line for Borden Inc. has been put on hold as a result of the company's agreement to be acquired by Kohlberg Kravis Roberts & Co. for about $2 billion worth of RJR Nabisco common stock owned by a KKR partnership.
Citibank and Credit Suisse underwrote the Borden credit in midsummer, and by the end of August, 12 other banks had committed to the deal as co-agents. General syndication was to have begun later this month, but that schedule has now been thrown off by the acquisition agreement.
At the least, the credit must now be amended to reflect the pending change in Borden's ownership, bankers said. It's also possible the credit will be entirely recast.
Borden's banks could throw a monkey wrench into the acquisition by refusing to approve the change in control, but it appears unlikely that the banks will balk.
"At worst, we're neutral" about the acquisition, said an official at one of Borden's co-agent banks.
Despite the disappointing performance of KKR's best-known investment -- the $30 billion buyout of RJR in 1989 -- the deal firm's name still carries plenty of clout in the loan market.
If Borden's banks refused to grant the amendment, KKR could turn to its own lenders, among them Bankers Trust and Chemical.
Borden paid a steep price for the $1.4 billion credit line, and there was speculation Monday that Borden and KKR might seek better terms under an amended or recast agreement with the Borden banks.
Borden has an investment-grade credit rating of BBB, but at 150 basis points over the London interbank offered rate, the company is paying noninvestment-grade pricing.
