When leveraged buyout firm Thomas H. Lee & Co. moved to buy household- products manufacturer Syratech Corp., the Boston-based firm turned to NationsBank Corp. for a veritable potpourri of financing.

NationsBank quickly put together a $160 million high-yield bond issue, a $130 million five-year revolving credit, and an optional $160 million bridge loan (see accompanying grapahic).

The deal, initiated last fall, typifies how banks are rushing to serve the leveraged buyout community. Indeed, buyout firms, with their wide- ranging financing needs, have emerged as one of the leading testing grounds for the one-stop shopping strategies of banks and Wall Street firms.

The Charlotte, N.C.-based NationsBank jumped on the trend early, launching a concerted push to serve buyout firms in 1994.

"Our goal was to work with them as partners and build relationships that would generate opportunities for them and for us, in financing, advisory, in all different product areas," said Tom Bunn, managing director in leveraged finance at NationsBanc Capital Markets.

It's easy to see the appeal of the market. LBO firms - such as Kohlberg Kravis Roberts & Co.; Hicks, Muse, Tate & Furst Inc.; Thoma, Golder, Cressey, Rauner; Cypress Group; and Texas Pacific Group - have constant and wide-ranging needs for financing and advice.

The firms, which have swung into heavy action over the past few years, typically acquire companies by putting up their own equity to pay for about 25% of the purchase. They pay for the rest with bank loans and junk bonds.

LBO firms, also known as financial sponsors, expand the acquired companies over five to seven years, paying off the bank debt through the cash flows of the companies. A firm exits the investment by merging the company with others they own, selling it to the public through a stock offering, or selling to another company.

All this makes buyout firms ready consumers for one-stop shopping. And the firms clearly appreciate the service.

"One-stop shopping has changed the LBO industry," said James G. Coulter, founding partner of Texas Pacific Group. "It's a reality, and we've seen an increasing desire on behalf of both banks and investment banks to get into product areas not normally in their bailiwick."

It is now almost routine for banks and Wall Street firms to provide buyout firms with soup-to-nuts financing. And competition to do so is intense.

"Banks and investment banks are willing to step up and put their capital quickly and cleanly on the line," said an executive of one buyout firm.

To distinguish themselves, competitors are increasingly touting their "ideas" - suggestions on which companies to buy and how to structure deals.

"The best argument financial institutions can make for one-stop shopping is bringing a deal on an exclusive basis," said Jeff Hughes, a principal at Cypress Group and a veteran of Lehman Brothers. "That's something of value. It's the lifeblood for us, and that's what you really pay for."

Some banks - most notably Bankers Trust New York Co. and Chase Manhattan Corp. - have been working with buyout firms since the 1980s. And these banks continue to provide leadership in the market.

Chase, for instance, demonstrated the new style of deals in a transaction with Texas-based Hicks, Muse. In May, Chase Securities Inc., approached the firm with a suggestion to merge Atrium Corporation, a Hicks, Muse company that makes residential windows and doors, with Ply Gem, a New York City-based manufacturer of building and home improvement products. Chase had a previous relationship with that company.

Now, Chase is slated advise Hicks, Muse on the $482 million transaction and to lead the financing, which is likely to include a revolving credit facility, a senior term loan, and a private issue of senior-subordinated notes. The deal is expected to close in September.

"Chase was thoughtful about our portfolio company's interests, and brought us a very good idea that was do-able," said Mike Levitt, a managing director and partner with Hicks Muse Tate & Furst. "Its not just that they provided more than one part of the capital structure, its providing the idea along with various pieces of the capital structure that is of most value to us."

Andrew Heyer, co-head of high-yield at CIBC Wood Gundy Securities added that financial institutions "have different aspirations as far as industries and sectors, and we compete with different people on a deal-by- deal basis. Everyone is staking out territories of expertise where they're comfortable."

Jay Allen, head of leveraged finance at BankAmerica Securities, says any player in the field must offer "more than just a capital-raising story." Banks, he said, must be "generating ideas, helping the firms identify the opportunities, and providing them with proprietary investment ideas."

Last year, BankAmerica ramped up its effort in the field by creating a joint venture between its M&A group, known as BA Partners, and its leveraged finance group. The aim was to identify opportunities and ideas for LBO clients and other corporate clients.

BofA demonstrated its versatility in the field in its financing of Stonington Partners' buyout of Packard BioScience Co.

The bank originally committed to a $140 million bank loan, and to co- manage a $100 million high-yield offering, led by Merrill Lynch & Co. But when weather in the financial markets changed, the bank reassessed the capital structure to a $150 million high-yield bond piece, and a $115 million loan, pushing out the amortization for the company.

Most banks that are zeroing in on the buyout market agree that creativity is the key to success.

"We are there to find the right product or mix of products to help the customer solve a problem," said Tom J. Doyle, a managing director who heads up the "acquisition finance" effort at Citicorp Securities Inc.

"When we approach a deal, we'll pitch it on what we believe we can deliver the best," he said. "Sometimes it will include one-stop shopping, and sometimes it won't. At the end of the day, you want the customer to be a repeat buyer, so you want to bring him the best."

Last year, when Parmalat Canada Inc., a division of Italian dairy giant Parmalat Finanziara SPA, wanted to move into another geographic market, Citicorp securities advised the company on its acquisition of Canada's Ault Foods, which had been bought by Beatrice Foods Inc. in March. Citicorp advised Parmalat on the acquisition, underwrote a $180 million (Canadian) senior secured credit facility on a nonrecourse basis, and provided a $59.8 million nonvoting equity contribution.

Despite such fancy footwork, commercial banks in the field do have their skeptics.

"The commercial banks have high-quality people who know what they're doing, but it takes time to create an institutional origination team, as opposed to a small group within a large company," said an executive at one buyout firm.

"Just as it took time for the banks to become full players in the high- yield business, it's going to take time for them to do this," he added.

"Where investment banks have an edge is in the research arena - the special expertise that the big banks don't have yet," said Carl Thoma, a principal at Chicago-based Thoma, Golder, Cressey, Rauner.

But he also pointed to some drawbacks of securities firms, especially in the lending arena.

"Underlying it all, the investment banks are not holding" the loan, he said. "At the end of the day, you want a bank with a relationship that is going to be with you in the long term."

Another buyout executive agreed, saying: "The investment banks are really trying very hard, but the LBO community just is not yet completely comfortable with the notion of an investment bank leading a big senior acquisition facility."

Eric Carp, a managing director in the leveraged buyout group at J.P. Morgan & Co., said the biggest challenge is perception. Morgan tapped Mr. Carp from Bear Stearns, where he initiated the LBO group.

"Those who will be successful over the coming years are those who have the ability to create an interesting and unique investment opportunity," he said. "That comes with having the relationships with the corporations and giving the financial buyers access to assets in a way that they haven't had before."

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