Chase Manhattan Bank financed the purchase of Heublein Inc.'s table wine and related businesses by Canandaigua Wine Co. of upstate New York for about $130.5 million in cash.
Canandaigua, a longtime Chase client which has been growing rapidly through a string of recent acquisitions, completed the Heublein deal on Friday.
Included in the purchase were Heublein's Inglenook and Almaden wines.
Heublein is a division of Britain's Grand Metropolitan, also a Chase client.
The acquisition financing was rolled into a new $437.2 million credit, which replaces $167.2 million of existing Chase-led bank facilities, and provides additional funds for the purchase of grapes from the 1994 harvest.
Chase underwrote the entire $437.2 credit, and syndicated roughly $260 million of that amount to members of Canandaigua's existing bank group, which includes First National Bank of Chicago, Bank of Boston, and Wells Fargo Bank.
The remainder will be syndicated in August.
Canandaigua, which has an implied senior debt rating of BB from Standard & Po0r's Corp., will pay an interest rate of 125 basis points over the London interbank offered rate.
The new six-year credit consists of a $224 million term loan, a $185 million revolver, and a $28.2 million standby letter of credit.
Canandaigua has been a Chase client for 47 years. Last year, it picked the bank's securities subsidiary to lead a public bond offering.
Proceeds from the $130 million offering of high-yield "junk" bonds were used to repay a Chase-led bridge loan for Canandaigua.
Ruth Dreessen, a Chase vice president who heads the bank's client group in the beverage/alcohol industry, said the purchase of the Heublein assets is part of Canandaigua's effort to boost its share of the varietal wine market. Canandaigua's initial specialty was dessert wines.
Sales of varietals - wines made from a single type of grape - have risen by 14% over the past five years, while sales of dessert wines have declined more than 7% during the same period, Ms. Dreessen said.
Canandaigua's major brands, in addition to those acquired from Heublein, include the Paul Masson and Taylor California Cellar wines.