Chase Manhattan Corp. is fighting a public battle to sell a hotly contested $2 billion syndicated loan for Sprint Spectrum, a high-profile telecommunications company.

The loan, which Chase wrestled away from the trio of Toronto Dominion, Citicorp, and J.P. Morgan & Co., has met with some resistance in the marketplace, despite the market's hunger for leveraged deals.

This emotionally charged credit, which was launched last Tuesday, has created something of a rift in the syndicated lending community. The three banks that lost the deal are unwilling to participate in the Chase-led loan, according to Sprint Spectrum officials. Their decision is now believed to be chilling other bankers' interest in the deal.

Typically, loans for companies like Sprint Spectrum - which will undoubtedly require many major financings - are quickly snapped up by banks. But this one is generating more conversations than commitments.

Sprint Spectrum is a new joint venture of Sprint Corp., Cox Communications, Comcast Cable, and Telecommunications Inc. That pedigree puts the BB-rated company in a strong bargaining position with syndicated lenders. Indeed, the parent companies, concerned about the deal's cool reception, are telephoning bankers this week to solicit their participation.

Sprint Spectrum will require approximately $9 billion in financing by 1998 as it creates a network that will offer personal communication services, the next generation of cellular technology.

The bank loan, brought to the market at the same time as $650 million in high-yield bonds, is an important first step in the company's financing plans.

But the way Chase eventually wound up winning the deal has left some bankers questioning the management of the new company.

After serving as unpaid lending advisers to Sprint Spectrum for more than a year, Toronto Dominion, Citicorp, and J.P. Morgan were widely expected to win the lead roles on the company's first syndicated credit.

Sprint Spectrum named the three banks as its lead lenders at a meeting in May at the Waldorf Astoria in New York.

"We did announce that (the three banks would lead the loan), but I would say that there were a number of developments that took place after that meeting that caused us to think that the Chase credit facility was more in line with the company's interests," said Robert E. Sleet, a vice president and treasurer at Sprint Spectrum, Kansas City, Mo.

Indeed, there were signs of trouble this spring when Sprint Spectrum brought in the Bank of New York Corp. and Barclays Bank, a unit of Barclays de Zoette Wedde, to work on the deal.

Mr. Sleet would not say what ultimately led the company to opt for Chase's deal.

The most obvious difference between the two deals is the larger size of the Chase loan: $2 billion, instead of $1.5 billion.

Chase fully underwrote its loan, as compared to the original, which was underwritten on a "best efforts" basis. As a result, Chase would be stuck with whatever portion of the syndicate it can't sell.

The Chase loan also includes an institutional investor portion, a $300 million, 9.5 year piece.

Some observers said that the institutional piece, which was not a part of Chase's original arrangement, demonstrates that both Chase and Sprint Spectrum are concerned over the lack of interest among banks in the deal.

Bankers supporting both the original and the current credit said that the market will ultimately be the arbiter of the deal.

Opponents said that the current structure, which gives the borrower greater flexibility, is prohibitive for some banks. Specifically, Sprint Spectrum is not required to reach strenuous performance hurdles to access the funds, some bankers said.

But supporters said that bankers would have a hard time staying out of a media deal for a client that - important in its own right - also has ties to high-profile telecommunications companies.

As far as the Sprint Spectrum's partners are concerned, the Chase loan doesn't appear to have caused irreparable harm.

"We understand the reasons some banks are not participating," said an executive at one of the partners. He said the partners would would prefer the banks to recognize that the borrower simply chose what it believes is the best deal.

Thus far, Chase has lined up a total of $750 million in commitments, including the $300 million from institutional investors.

Bank of New York Corp. is the only bank associated with the original deal that is participating in the current loan, committing $100 million as a managing agent.

Other banks participating in the deal include: Hypo Bank, which committed $125 million; Mitsubishi Trust, at $100 million; and Societe Generale, at $100 million.

Other potential managing agents have until Aug. 14 to commit to the deal.

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