Chase Lines Up Loan to Aid $57B Olivetti Bid

Bankers in Chase Manhattan Corp.'s London office are trying to drum up commitments for what would be the mother of all syndicated loans, a bank source said.

The bank is lining up a loan package that could exceed $20 billion to help finance Olivetti SpA's $57.3 billion hostile bid for Telecom Italia SpA. Chase is one of four banks advising and helping fund the deal. Commitments are due by the end of the month. A bond deal is also expected.

Though Olivetti's bid may not succeed, Chase is trying to firm up support for the loan because of the package's size. At least five banks have been asked to commit themselves to the loan: Deutsche Bank, Halifax, Barclays Bank PLC, Industrial Bank of Japan, and Toronto-Dominion Bank and Trust.

The bank group, which also includes Donaldson, Lufkin & Jenrette, Lehman Brothers, and Italy's Mediobanca, is asking for minimum commitments of $1.1 billion.

Tentative pricing on the loan includes an up-front fee of 175 basis points. Interest is expected to be 225 basis points above the London interbank offered rate, a source said. Banks would be paid a 50 basis- point-fee if the deal falls through.

Olivetti began its hostile takeover attempt last month for the formerly state-run telecommunications monopoly. If it succeeds, the bid would be the largest European takeover ever and is seen by some in the investment banking community as a test case for the viability of such bids on other former state-owned monopolies.

Last week Olivetti backed its bid to buy Telecom Italia by unveiling an industrial plan for the combined business. The plan included 13,000 job cuts, or about 10% of the work force, at the mobile phone service provider.