Cendant Corp. and lead lender Chase Manhattan Corp. have agreed to add $1.25 billion to a $2 billion loan package backing Cendant's recent buyouts.
The new $3.25 billion deal was agreed to late Friday by 20 syndicating banks and Cendant, a marketing and franchise company whose businesses include Howard Johnson's and Avis.
Cendant, which has dual headquarters in Parsippany, N.J., and Stamford, Conn., plans to use the loan to finance its $733 million buyout of England's RAC Motoring Services Ltd. and complete its $3.1 billion acquisition of American Bankers Insurance Group Inc.
The company said it will also use the loan to repay existing debt. The deal was also increased because of a "strong reception" by investors, Cendant and Chase said.
Terms of the loan were unavailable late Friday. But bankers said the package had been structured as a 364-day term loan with pricing starting at Libor plus 0.625% for the first six months, Libor plus 0.875% for the next three months, and Libor plus 1% for the duration.
The deal's four documentation agents are Barclays Bank, Bank of Nova Scotia, NationsBank Corp., and Credit Lyonnais. BankAmerica Corp. is syndication agent.
The loan comes at a pivotal time for Cendant, which was formed last year by the merger of CUC International Inc. and HFS Inc.
The company continues to grow through an aggressive buyout binge, but it also is battling the repercussions of last month's announcement that it had found accounting irregularities on its books.
That disclosure has set off a chain of problematic events for Cendant. Among them: the possibility of a $115 million adjustment in 1997 earnings, a lawsuit by former HFS Inc. shareholders, and a 40% decline in Cendant's stock price.
