Chase Manhattan Corp. is expected to bring a $600 million loan for Leonard Green & Partners to market by the end of the summer.

The loan would be used to finance the Los Angeles-based leveraged buyout firm's purchase of two home improvement retailers: Hechinger Co. and Kmart Corp.'s Builder's Square.

Bankers expect the loan to be syndicated within the next few weeks. According to market sources, it would be structured as a five-year, borrowing-base, revolving credit and would be secured by the total assets of the new company.

The acquisitions, announced late last week, are valued at roughly $136.6 million. Leonard Green plans to buy Hechinger in a cash buyout for $3 per share and will pay Kmart $10 million for Builder's Square.

Leonard Green plans to combine the two stores into a single new company with 279 stores and annual revenues of about $4.5 billion. The still unnamed company would be the third-largest home improvement retailer, behind market leader Home Depot Inc. and No. 2- ranked Lowe's Cos.

Leonard Green would own the entire company unless Kmart exercises its option to buy up to one-third of it. The new company would be based in Hechinger's hometown, Largo, Md.

Chase is the administrative agent and sole arranger for the loan. Citicorp USA Inc., a subsidiary of Citibank, is the syndication agent; Bank America Business Credit Inc. is the documentation agent.

This is not the first time Chase has worked with Leonard Green. It was the buyout firm's banker in financing previous deals.

Chase also has a history with Kmart. It led the retailer's $3.7 billion restructuring package, which included a $2.5 billion revolving credit and a $1.2 billion term loan.

Kmart's sale of Builder's Square is the final step in its effort to shed its specialty retail businesses.

Representatives at Kmart, Hechinger, and Leonard Green would not comment on the deal.

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