Clayton, Dubilier & Rice's acquisition of Riverwood International. Though it was no surprise that Chemical won the lead role in a $1.55 billion loan for the leveraged buyout, the deal could be a feather in the cap of the bank's three-year-old junk bond business. The multifaceted roles Chemical is playing on the leveraged buyout is the latest sign that commercial banks are making progress in developing both their one-stop-shopping operations in general and their investment banking business in particular. "It's a big deal for the high-yield market, irrespective of whether it is led by a bulge-bracket investment bank or a commercial bank," said a bond analyst. Some have called the lead on the deal something of a landmark for the bank as it has tackled progressively larger business with a brain trust of former Drexel Burnham Lambert bankers. Chemical and Bankers Trust New York Corp. are prominent on a growing list of banks that are making inroads in the junk bond field. The high-yield Riverwood transaction is almost 75% larger than Chemical's next-largest high-yield deal, a $375 million offering for UCAR Global Enterprises, which it sold in January as part of a larger financing. In the UCAR deal Chemical served as lead manager. The largest deal for which the bank acted as sole manager was a $285 million bond issue that was part of a financing for the sale of Six Flags Theme Parks by Time Warner Inc. It is not clear whether Chemical will lead the Riverwood deal or bring in other managers. Analysts said Chemical was able to reach a potentially landmark deal after less than three years because it has fought so hard for the business. Market sources said the ability of a single institution to manage all the needs of a client improves its ability to respond to the constantly changing capital markets. Indeed, some see the development of loan syndication operations by investment banks as evidence that the one-stop-shopping concept has won converts among the corporations that use the services. Though representatives from Chemical would not comment on the Riverwood transaction, they did stress the importance of the one-stop-shopping concept in the development of their business. "What we're doing is capturing the optimum levels of excellence in ideas, money, and relationships," said James B. Lee Jr., the head of global investment banking at Chemical. Industry experts said that allowing one bank to lead both the junk bonds and the bank loans ensures that investors, who are often buyers of both debt instruments, hear the same company story. Even with those potential advantages, however, industry experts said the proof of efficiencies is in deal execution. Early indications are that the junk bonds will be well received. Three factors work in Riverwood's favor, according to investors. First, the market knows the company, which has other such debt issues. Second, the company is viewed as a high-quality operation, and third, Clayton, Dubilier & Rice is well regarded in the high-yield marketplace. "Those things should suggest that this deal is doable," said one investor.

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