Like many of the movies and records that the talented Dreamworks SKG trio have made, their first loan - a $1 billion facility led by Chemical Banking Corp. - has received mostly positive reviews.

Jeffrey Katzenberg, Steven Spielberg, and David Geffen have secured a 10-year revolving credit facility for their fledgling multi-media entertainment company.

There have been larger deals, but "this has got to be the sexiest deal of the year, because of the principals involved," one banker said.

"For banks interested in lending to the media, this deal is almost a must," said a banker hoping to join the syndicate.

Sources close to the deal said Chemical won the mandate in a bidding competition with Bankers Trust New York Corp.

As a new company, Dreamworks will undoubtedly need other banking services as well, said bankers.

In fact, some bankers doubt that the syndicate group will be as large as the banks would like, keeping some entertainment lending operations out of the picture.

"It'll probably be a controlled bank group," said a banker. "Because of the novelty of the business, the paper will probably not be widely disseminated."

The current banking market does not require a particularly large bank group for a $1 billion facility, said a market source.

Bankers convinced of the deal's merit highlight the stock purchases of Microsoft co-founder Paul Allen and Capital Cities/ ABC in Dreamworks.

The co-founder of Microsoft, Mr. Allen has reportedly invested $500 million in the new company.

To be sure, the deal has some skeptics.

While bankers did not doubt the creative power of three of the most successful people in Hollywood, they did express some surprise at the unusually long 10-year tenor and at the pricing.

The deal is reportedly priced at the London interbank offered rate plus 50 basis points, with commitment fees of 15 to 25 basis points.

"A deal like that for an unrated start-up entity, at less than 100 under Libor, is quite surprising," said another banker.

Those looking to participate in the loan are anticipating some measure of difficulty from their credit departments to approve a 10-year revolving credit.

Advocates of the loan said there is little difference between a 10-year loan and a shorter one in terms of risk. Since these deals are back-end weighted, with the first few years of a deal typically carrying little amortization, banks have to wait several years to be repaid anyway. And the success or failure of Dreamworks will be evident long before that.

Others think the market will jump at the chance to participate in a deal that brings together Mr. Spielberg's renowned movie success, Mr. Geffen's record achievements, and Mr. Katzenberg's animated movie talents.

Market sources said the deal's structure reflects Dreamworks' current equity holding of $1 billion and its need to build the business.

Bank meetings are reportedly scheduled for next Monday and Tuesday.


In other syndicated lending news, Chemical Bank and J.P. Morgan & Co. are reportedly lining up a $1.7 billion credit for Blue Shield's hostile bid for Wellpoint Health Networks.

The bid could prevent Wellpoint from acquiring another California-based health maintenance organization, Health Systems International.

Market sources expect the two banks to underwrite about $250 million each.

The two money-center banks also are joining forces on a $3.25 billion refinancing for Dean Witter, Discover & Co.

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