Chase Launches 2 Major Loan Syndication Deals

The 1997 loan syndication market got off to a roaring start this week with Chase Manhattan Corp. launching two major deals.

A bank meeting is scheduled in Dallas today to sell Chase's $2 billion loan supporting A.H. Belo Corp.'s acquisition of the Providence Journal Co. And on Thursday, Chase launched a $1.75 billion deal for industrial giant American Standard Cos.

BankAmerica Corp., NationsBank Corp., and Bank of Tokyo have already come in as agents on the Belo deal, for which Chase is administrator and sole arranger. The loan is divided into a $500 million 364-day revolver and a $1.5 billion five-year revolver.

If drawn, the loan is priced at the London interbank offered rate, plus 40 to 50 basis points. If not drawn, the 364-day tranche pays a facility fee of nine basis points, while the five-year loan pays one-eighth of a percent.

Dallas-based Belo, which announced its acquisition of Providence in September, is not rated but is considered a midrange investment grade company.

Meanwhile, NationsBank and Bank of Nova Scotia came in as co-syndication agents on Chase's $1.75 billion loan for Piscataway, N.J.-based American Standard. The loan, which refinances an old credit facility, is in conjunction with the company's previously announced secondary stock offering.

Elsewhere in the loan market, some bankers said they were seeing red over paint company Sherwin Williams' recent decision to alter the terms of its $1.45 billion loan.

The Cleveland-based company changed the terms of the Chase -led deal around Christmas, adding a two-year term loan option to a five-year revolving credit.

The change - which occurred early in the documentation process - means the transaction could now have a duration of up to seven years. That is a problem for some lenders that do not participate in deals that last more than five years.

Some bankers said the change in the loan's structure typified the way A- rated Sherwin Williams approaches its banks.

"They're a very good company, but are tough to deal with," said one banker who asked not to be named. "They watch their bottom line and don't give anything away. A lot of companies could say that, but these guys live it."

To be sure, the loan, which supports the acquisition of Thomson Minwax, was well received in the market, where it brought in almost $1 billion more than needed, sources said.

Some bankers pointed out that previous Sherwin Williams deals had a two- year term loan option.

A Chase official said the changes in the loan were minor and were done at the request of Sherwin Williams. Nonetheless, some bankers said they hoped such eleventh-hour changes were not going to become standard operating procedure.

"I hope this doesn't create any kind of precedent," said a bank lender familiar with the transaction.

Chase officials added that the change in the deal structure resulted from the normal process of negotiation.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER