Chemical Bank beat out Chase Manhattan Bank to lead the bank financing for Investcorp SA's planned purchase of Circle K Corp., the bankrupt convenience-store operator.

After competing vigorously to underwrite the bank financing, Chase dropped out of the deal last week because it did not want to play a subsidiary role in a Chemical-led deal, sources said.

Chase had its own ideas about how the bank financing should be structured, which apparently were not compatible with Chemical's approach.

Then there was the ego factor. "Both wanted to lead the parade," commented one banker at another institution.

Chemical submitted a joint bid with its 40%-owned affiliate, CIT Group, market sources said. Terms of the Chemical bid could not be learned.

Circle K has been operating under Chapter 11 of the federal bankruptcy code for two years.

In March, an investor group led by Investcorp tentatively agreed to pay $425 million for the company. But early last week, Circle K said the price was reduced by $50 million to reflect an increase in planned expenditures by the investors on upgrading gasoline facilities.

Banking sources said last month that the bank financing would exceed $200 million. It couldn't be learned whether the $50 million reduction in the purchase price would result in a smaller bank deal.

Meanwhile, no other bidders for Circle K have emerged.

Circle K bondholders, unhappy with the original Investcorp bid, hired investment banks in April to solicit other offers.

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