Chemical Bank is syndicating a $685 million loan to Blackstone Capital Partners for the purchase of 75% of UCAR International.
Chemical, which has scheduled a bank meeting for Monday, reportedly has several commitments from banks and nonbanks for the multi-tranche deal.
Blackstone is using the loan, plus $200 million of its own equity, to purchase 75% of UCAR for more than $1 billion. Union Carbide will hold the other 25% of the graphite electrode manufacturer for the steel mini-mill industry. Union Carbide currently is an equal partner in UCAR with Mitsubishi Corp.
The deal is one of the largest acquisitions by a financial company this year, and bankers expect similar transactions on the horizon. They point out that financial buyers are currently flush with cash.
Financial buyers are distinguished from strategic buyers, who typically make acquisitions in order to build market share.
Union Carbide's continued involvement in UCAR is something industry watchers say typifies the kinds of deals Blackstone makes. Blackstone had previously made such joint purchases with Time Warner and Union Pacific.
Blackstone has worked with Union Carbide in the past, serving as their financial adviser in 1990 when they sold 50% of UCAR to Mitsubishi.
Priced at the London interbank offered rate plus 250 basis points, the entire bank portion is seven years, with a $100 million revolver, $340 million letter of credit, and a $45 million A term loan.
