The high rollers continue to find a warm welcome in the bank loan market.
Big loans to Hicks, Muse, Tate & Furst and to a unit of Kohlberg Kravis Roberts & Co. were the latest to win relatively cheap pricing this week, as banks lined up to participate in the higher-yielding deals.
A $479 million loan for KKR-owned Newsquest Media Group's acquisition of Westminster Press was priced by CS First Boston. And Chase Manhattan and Bankers Trust priced a $600 million bank loan for Hicks, Muse, Tate & Furst's purchase of American Home Products' food business.
The Westminster Press buyout was financed with a $79.9 million revolver and a $150 million term loan - both at 200 basis points over the London interbank offered rate. A "B" tranche, of $50 million, was priced at 250 basis points over Libor.
The deal for Hicks Muse - in tranches of $300 million, $270 million, and $100 million - came in at prices ranging from 200 to 350 basis points over Libor. The buyout firm said the syndicate for its deal will consist of 20 to 30 banks, and noted that there was considerable interest by banks in the syndication.
In addition to the loan, the banks are leading a $400 million bond issue to finance the Hicks, Muse purchase of the food business.
Steve DeMenna, a managing director in loan syndications at BankBoston, said the deals marked a continuation of a trend over the last several years.
"Banks are very interested in financing well-structured transactions with strong sponsors," he said. "The stronger the sponsor, the more agressive the pricing for the structure.
"The volumes are up at the deal shops, and that spills over to the deal markets," he added.
Banks suffered losses when some LBOs from the 1980s came unraveled. But participants in the current round of deals say it will be different this time.
"Banks in the high-yield market have held the line on the amount of leverage that they're willing to accept. As a result the market will continue to be robust but not overheated," said Ken Kencel, SBC Warburg's executive director of capital markets.
According to Loan Pricing Corp., prices on LBO loans have been falling due to competition among banks and "better quality borrowers with alternative sources of capital."
CS First Boston, the top adviser for cross-border transactions in the first nine months of this year, according to Moody's Investor Services, is providing one-stop loan and bond financing for Newsquest, a British regional press association.
In addition to underwriting the loan, the unit of CS Holding led a $192 million debt issue and served as merger adviser on the original transaction for Newsquest's acquisition. It also will lead any additional bond offerings.
Newsquest announced in August that the acquisition would create England's largest publisher of regional and local newspapers.
led a $192 million debt issue, will lead any additional bond offerings, and served as merger adviser on the original transaction for Newsquest's acquisition.
Newsquest announced in August that the acquistion would create England's largest publisher of regional and local newspapers.
