Chase Manhattan Bank is playing a lead role in over $4.3 billion of acquisition financings in the syndicated loan market.
The money-center bank is serving as a co-lead with BankAmerica Corp. and Chemical Banking Co. on a $3 billion five-year revolving credit to Raytheon for its friendly acquisition of E-Systems Inc.
The three banks are underwriting the deal equally, with Chemical serving as the administrative agent, Chase the syndication agent, and BankAmerica the documentation agent.
Chase is also leading and underwriting a $1.35 billion facility for Ingersoll-Rand Co.'s hostile offer for Clark Equipment Co.
Clark, based in South Bend, Ind., is trying to block the bid.
"Chase has been very busy in the last week," said Chad A. Leat, a managing director at Chase Securities Inc.
These two deals also come as businesses keep turning to banks to fund mergers and acquisitions. Indeed, bankers said that the refinancings that had driven the record loan syndication business last year has peaked, even as acquisition finance continues to grow.
Bank meetings have not been scheduled for the two facilities but are expected to take place in the next two weeks.
Raytheon's acquisition of the Dallas-based E-Systems is the latest in a series of large defense mergers taking place amid intensified pressure on military spending.
Military contractors have stepped up their efforts to ensure post- consolidation survival. Following the credo that the best defense can sometimes be a good offense, other companies including Northrop Grumman Corp., and Loral Corp. were reportedly bidding for the military communications expertise at E-Systems.
"This is an intensification of something that has been going on for more than two years in the industry," said Martin Knoblowitz, a director at the Standard & Poor's ratings group.
Some expect companies with several product lines to sell off their defense businesses, which might show limited growth but could fetch attractive prices.
Ingersoll-Rand, based in Woodcliff Lake, N.J., carries a senior debt rating of A but is on negative watch at Standard & Poor's. Ingersoll has secured pricing for the drawn portion of the loan at the London interbank offered rate plus 25 basis points. The facility fee ranges from 8 to 27.5 basis points.
AA-rated Raytheon, based in Lexington, Mass., reportedly has also received a drawn price of Libor plus 25 basis points.
