Chase Manhattan Bank, Chemical Banking Corp., and BankAmerica Corp. have won the lead on a $4.8 billion loan for Northrop Grumman Corp.'s acquisition of the defense businesses of Westinghouse Electric Corp.

The loan backs the $3 billion all-cash acquisition that was announced Wednesday, refinances some debt, and provides approximately $800 million of liquidity.

The defense spinoff allows Westinghouse to pay down a significant portion of the $7.5 billion in debt that it accumulated when it purchased CBS last summer.

The deal underscores the progress banks have made in an arena previously dominated by investment banks: some of the banks are not only are arranging the loan, but are taking key advisory roles in the merger.

Bankers expect the wave of strategic mergers that pushed Northrop to purchase Grumman last year and Westinghouse's defense business this week to create similar opportunities in the year ahead.

Chase, the lead bank for Northrop for the past 50 years, will serve as administrative agent on the new transaction. The bank's recent role as co- lead bank on Northrop's acquisition of Grumman helped it win a lead role.

"Northrop's trust in us and our trust in them was built over that transaction," said Patricia B. Bril, a managing director at Chase Manhattan Bank.

Chemical Bank, which co-led the Grumman acquisition, will be the syndication agent, and BankAmerica, consistently a lead corporate lender, will be the documentation agent.

The loan contains a two-year, $1.5 billion term loan, a six-year, $1.5 billion term loan, and a six-year, $1.8 billion revolving credit.

The lead banks, which equally underwrote the entire transaction, expect to syndicate the deal to a broad investor group at a Los Angeles bank meeting later this month.

Pricing on the loan is tied to the company's financial ratings at the time of the closing, and is expected to start at the London interbank offered rate plus 175 basis points.

J.P. Morgan, Roger Altman - the former deputy treasury secretary - and Chemical Securities served as advisers to Westinghouse. Salomon Brothers advised Northrop Grumman.

While J.P. Morgan and Mr. Altman both have served Westinghouse in the past, acting as advisers in it's acquisition of CBS, Chemical's role is something of a surprise to experts. Chemical provided the fairness opinion and assessed the financial qualifications of competing bids.

Chemical's role on both sides of the transaction - providing the financing for the buyer and advising the seller - raised some eyebrows. But Fredric G. Reynolds, the chief financial officer at Westinghouse, said the bank's dual roles did not present a problem.

"We always ensure that there's a wall between the two in fairness to both sides," said Mr. Reynolds. "I was very comfortable with that."

Mr. Reynolds said that Chemical is known for its strong loan syndication operation, and that the bank is well-qualified to assess the financial viability of various bids.

"Westinghouse is well-served by having industry experts from all areas as advisers," said Mr. Reynolds.

While bankers were hard-pressed to think of another instance where a financial institution played a significant role on both sides of a sale, they said that the phenomenon could become more common.

"Everybody's looking to do more business," one loan syndicator said.

Bankers pointed out that Westinghouse employed only commercial bank advisers, traditionally the realm of investment banks.

"I hadn't thought about (not using investment banks as advisers)," said Mr. Reynolds, "but I don't have any issues with it."

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