PaineWebber Inc. and Chase Manhattan Corp. are expected to help finance Patriot American Hospitality Inc.'s planned $2.1 billion acquisition of Interstate Hotels Corp., announced last week.
The two companies have issued a "highly confident" letter to Dallas- based Patriot, saying they can provide the $560 million needed to finance the cash portion of the deal, said William Evans, Patriot's president and chief operating officer.
PaineWebber has a long relationship with Patriot, a real estate investment trust. Most recently, it co-led a $1.2 billion loan to Patriot backing its $1.1 billion acquisition of Wyndham Hotel Corp., announced in April.
The loan was recently restructured, and Patriot brought Chase into the deal as part of an effort to expand its commercial banking relationships.
"We found Chase to be an excellent choice, and we are happy with our relationship with them," Mr. Evans said.
The Wyndham package originally included a $700 million revolver and a commitment for a $500 million secured term loan. The $700 million portion was closed this summer, but the $500 million portion was restructured in August.
The company increased the revolver by $200 million and created a separate $350 million revolver. The resulting package is one of the largest lines of unsecured credit ever extended to a real estate investment trust.
PaineWebber and Chase are underwriting the new portions of the deal equally.
"With the market heading the way it is, we decided that we didn't need to do secured" financing, Mr. Evans said.
He added that the new arrangement positions the company to do a bond offering next year. The offering, which would be $300 million to $400 million, would be used to help pay down bank debt.
"There's a lot of liquidity in the market, and banks are interested in lending credit to companies such as ours that are financially strong," Mr. Evans said.
PaineWebber led Patriot's $380 million initial public offering in 1995 and a subsequent $160 million equity issue in July. In addition, PaineWebber advised Patriot on its acquisitions of both Wyndham and Interstate.
