In brief: Chemical Leads Loan for Huge Leveraged Buyout

deal for Clayton, Dubilier, & Rice's acquisition of Riverwood International Corp. Chemical will lead a $1.55 billion bank loan and a $650 million bond offering to support the leveraged buyout firm's announced $2.7 billion purchase of Riverwood International Corp., a global paperboard and machinery-based packaging systems company. The loan supports one of the largest leveraged buyouts in recent years, while the bond deal could be something of an underwriting landmark for banks because of its size. "Everybody's pretty excited about this deal, since there's really not much (leveraged) product out there," said an industry expert. As with other leveraged buyouts, the loan is expected to be divided into several parts, including a longer duration portion that institutional investors typically purchase. Riverwood had strong banking relationships with Morgan Guaranty, NationsBank Corp., and BankAmerica Corp., and hopes to maintain some of those relationships. "We will continue to try to provide strong working relationships with a number of banks that have served us in the past," said Thomas H. Johnson, president and chief executive at Riverwood. Industry experts said they expected the company to try to keep its relationship banks, by trying to get them to serve as co-agents on the deal. In addition to its lead position on the bond and bank loan, Chemical may play an equity role in the transaction, which it did on previous deals.