Bankers Trust, Hanover Work On Coltec Credit

Bankers Trust Co. and Manufacturers Hanover Trust Co. are working together on a possible new bank financing of at least $700 million for highly leveraged Coltec Industries Inc.

The two banks are seeking to line up one or two other partners to help lead the credit. It would be used to refinance higher-cost debt stemming from a recapitalization in 1986 followed by a buyout two years later.

No Stock Offering Yet

The new bank financing hinges on Coltec's ability to follow through on its plan to go public again, said a banker familiar with the situation.

Coltec has not yet filed a stock offering.

Paul Schoen, Coltec's treasurer, declined to comment either on the stock offering or the new bank credit under discussion.

Coltec is a diversified maker of aerospace, automotive, and industrial products. The company changed its name from Colt Industries in 1990 to reflect the sale of its fire-arms division. It is based in New York.

Even if Coltec pulls off a stock offering, its balance sheet would remain highly leveraged, and the new bank loans would be classified as so-called HLTs, a banker said.

Declines New Role

Sumitomo Bank Ltd. of Japan initially was expected to join Bankers Trust and Hanover in the financing but is said to have dropped out. A Sumitomo official in New York declined to comment.

Sumitomo is lead bank for Coltec's existing letter-of-credit facility, which backs a commercial paper program.

Bankers Trust, meanwhile, was the company's agent bank for a $1 billion loan in 1986. It is expected to be administrative agent on the new bank credit.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.