Philip Morris Cos. is replacing a $15 billion credit line with a two-part $12 billion deal on slightly better terms through its existing lender, Citibank.

At the same time, the giant food and tobacco company's finance subsidiary, Philip Morris Capital Corp., is consolidating and enlarging its credit lines.

The moves are unrelated to a recently announced restructuring that will require the closure or downsizing of about 40 plants and a reduction in the company's work force by about 14,000 jobs over the next few years.

Continuing Role

Citibank, which was sole agent on the $15 billion five-year revolver in 1991, is playing the same role on the parent company's new credit, which is expected to close by year-end.

With no coagents to share credit, the Philip Morris deal will give Citibank a helpful lift in the closely watched league-table standings.

The new line is structurcd as a $4 billion, 364-day facility and an $8 billion, five-year revolver.

If the credit's syndication is oversubscribed in the loan market, Philip Morris has the option of expanding it to $15 billion.

Pricing and Fees

Participating banks' commitments are due Wednesday.

The borrowing rate on both components is 30 basis points over the London interbank offered rate. In addition, Philip Morris will pay an annual "facility" fee of 10 basis points on the 364-day portion, and 12.5 basis points on the five-year revolver. There are no up-front fees.

Under the existing credit agreement, Philip Morris pays a borrowing rate of 35 basis points over Libor, and an annual facility fee of 15 basis points.

Citibank is one of three coagents on a new $2 billion credit for Philip Morris Capital. Bank of New York and Dresdner Bank are the other coagents on the deal, which consolidates three credit lines totaling $1 billion.

Half the $2 billion credit expires in 364 days; the other half, in five years. Pricing is identical to that of the $12 billion credit for the parent company.

Contrast with IBM Credit

Syndication of the Philip Morris deal comes on the heels of the marketing of a $10 billion credit for International Business Machines Corp.

Both companies are A-rated, investment-grade credits. But unlike in the IBM deal, which drew a fair amount of controversy, several bankers predicted a quiet Philip Morris syndication.

Though the pricing is actually lower than that of the IBM credit, Philip Morris is a more familiar name in the loan market, and bankers appear more comfortable with its prospects.

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