CIBC Wood Gundy will bring to market next month a $300 million loan for a Czech aircraft builder.
Aero Vodochody, a privatized company on its way to becoming fully commercial, will use the loan to build 72 jet fighter planes for the Czech Republic, said Thomas J. Gallagher, managing director in CIBC Wood Gundy's global airlines, aerospace, and defense division.
CIBC Wood Gundy expects to hold a bank meeting for the loan in late September and says syndication is likely to close in mid- to late October.
The five-year loan, guaranteed by the Czech government and priced at a small premium, is comprised of revolving facilities, a term loan, and letters of credit. Further details on the pricing were not disclosed.
CIBC Wood Gundy provided Aero Vodochody with a $75 million bridge loan about two weeks ago so it could pay suppliers. Terms and pricing were not disclosed. The bridge facility will be refinanced through the $300 million loan.
Mr. Gallagher predicts that demand for jet aircraft and aerospace financing is going to increase.
He says this year's expected figure for aircraft financing of $41 billion will jump to $51 billion next year. The peak is expected to be in 1999, when $56 billion will be needed to fund 850 new aircraft.
Mr. Gallagher also predicts the military aircraft industry will globalize, changing the nature of ownership of business.
Noting that nations will start to insist on sharing the production and technology of the planes, Mr. Gallagher said, "Country X is not going to say, 'Thank you America,' and hand over a check."
A wave of consolidation in the aircraft industry is also expected.
"The number of players will decrease, and their sizes will increase," said Mr. Gallagher.
In a sign of the changes to come, Boeing Co. has announced that it will buy a 35% stake in Aero Vodochody.
Lehman Brothers has won over a client from Fleet Financial Group.
Physician Computer Network Inc., Morris Plains, N.J., chose Lehman as its administrative agent for a new credit facility, according to sources close to the deal.
The loan is structured as a $100 million four-year revolving credit. The pricing for the fully underwritten loan was not available.
Physician Computer Network provides hardware, software, and system integration services to the health care community.
