Chemical Bank has agreed to provide bank financing for Investcorp's planned purchase of Camelot Music Inc., which operates a nationwide chain of music stores.
In announcing the acquisition agreement Monday, Investcorp did not disclose terms of the deal or how it would be financed. The purchase price, though, is widely believed to exceed $350 million.
Settled With Handshake
The exact amount of bank financing has not yet been determined, but as a general rule of thumb in leveraged buyouts, bank debt does not exceed 50% of the purchase price.
It's understood that Chemical will fully underwrite the bank deal, once the final mix of financing for the acquisition has been set.
While a formal commitment letter has not yet been issued, Chemical's role as lead bank is said to have been settled at this point with a handshake.
Investcorp's traditional lead bank had been Manufacturers Hanover Trust Co. Chemical inherited the Investcorp relationship when the two banking companies merged at yearend 1991.
Acquired Saks Fifth Avenue
Investcorp describes itself as an international investment bank, with offices in, New York, London, and Bahrain.
The group gained prominence in 1990, when it acquired Saks Fifth Avenue, the up-scale department store in New York City, for roughly $1.6 billion.
Other Investments
The Camelot purchase is in keeping with Investcorp's focus on buying retail properties.
Based in North Canton, Ohio, Camelot operates 365 stores in 34 states, selling CDs, cassettes, videocassettes and related products.
Revenues for fiscal 1993 were $421 million.
In addition to Saks, Investcorp's other investments include Circle K Corp., which it recently acquired out of bankruptcy proceedings, as well as Color Tile, Tiffany & Co., and Carvel Corp.
Investcorp investments in Europe include Gucci and Riva Yachts in Italy, Brequet in Switzerland, Chaumet in France, Mondi in Germany, and Thorn Lighting in Britain.
To date, Investcorp has made more than $5.6 billion worth of acquisitions.
Syndication of the Investcorp loan is expected later this fall.
