J.P. Morgan & Co. and Chemical Banking Corp. last week landed commitments totaling $1.3 billion for Westinghouse Electric Co.'s acquisition of CBS.
Bankers working on the deal said PNC Bank Corp. and Mitsubishi Trust committed $400 million apiece, and Toronto-Dominion Bank stepped up for $500 million.
Counting the $1 billion committed by each of the lead banks, $3.3 billion of the $7.5 billion loan has been raised so far.
"This is a very quick start for a deal like this. It's got a lot of momentum," one banker said. The acquisition is contingent on Westinghouse's ability to raise the money.
The money will used for the acquisition and to refinance loans of $2 billion to Westinghouse and $500 million to CBS.
A bank meeting last Thursday attracted about 100 institutions, representing what one banker called "a new intersection of knowledgeable media lenders and industrial corporate lenders."
PNC, Mitsubishi, and Toronto-Dominion, were among 30 banks invited to participate in the top tier of the deal.
Participation at this level entitles the lender to additional fees in exchange for making commitments of up to $400 million apiece to raise the $5.5 billion needed to round out the financing, a banker said.
The banks committing $400 million will receive an "early bird" fee of $250,000 each, in addition to 137.5 basis points on their final allocation, bankers said.
Lenders committing $100 million will receive cogent titles and 100 basis points on final allocation. Commitments of $50 million will garner lead manager roles and 75 basis points on allocation.
Commitments of $25 million will receive 50 basis points on allocation.
Officials of Toronto-Dominion were impressed with the deal and wanted a bigger allocation, one banker said. Pittsburgh-based PNC's participation stems from its long relationship with Westinghouse, which is also based in Pittsburgh.
The Westinghouse deal is one of two large loans for media companies that are currently in the market.
Several banks have been asked to make presentations next week to Walt Disney Co. for its acquisition of Capital Cities/ABC Inc.
The Westinghouse deal, a leveraged financing, is appealing to banks because of the rich fees.
At the same time, a dearth of big deals in the non-investment-grade category is giving Westinghouse a chance for cheaper pricing than it normally would get.
Chemical and Morgan have set Aug. 24 as the deadline for managing agent commitments. The rest of the commitments are due by the end of the month.
The loan is divided into three equal parts: a two-and-a-half-year term loan, a seven-year revolving credit, and a seven-year term loan.
The initial spread is 175 basis points over the London interbank offered rate.
