Citibank and Credit Suisse have been chosen to lead a $10 billion credit for Walt Disney Co.'s acquisition of Capital Cities/ABC Inc.
The syndicated financing is the biggest bank loan for a media merger since a $14 billion deal in 1989 for Time Inc.'s acquisition of Warner Communications. Disney is acquiring Cap Cities for $19 billion.
The main unit of Citicorp and the CS Holdings' commercial bank have committed $2 billion apiece to the Disney deal and will act as administrative agents.
Units of Bankers Trust New York Corp. Chemical Banking Corp., and BankAmerica Corp. have committed $1 billion each and will act as managing agents.
The banks were preparing to send packages on Wednesday soliciting $500 million commitments from about 50 banks that have lending relationships with either Disney or Cap Cities.
A banker familiar with the syndication predicted it would be "dramatically oversubscribed" because of strong interest in media lending. "If you want be lender in the business, this deal's a 'do,'"the banker said.
Bankers said the loan includes a $5 billion 364-day revolving loan and a five-year revolving loan for the same amount. The facility fee is expected to be less than 10 basis points, in keeping with the borrower's double-A credit rating.
Consolidation in the communications industry has become one of the hottest sectors for banks. J.P. Morgan & Co. and Chemical Banking Corp. recently brought a $7.5 billion loan to market for Westinghouse Electric Co.'s leveraged acquisition of CBS.
A reported bid by Time Warner Inc. for Turner Broadcasting System apparently would not involve bank financing, according the published accounts, but might force the restructuring of an existing $8.3 billion loan to Time Warner led by Chemical, Bank of New York Co., and BankAmerica.
Industry sources said Disney's selection of Citicorp should come as no surprise, because Citi has led the Burbank, Calif., entertainment conglomerate's most recent loans. They noted that Credit Suisse has participated in loans and that its affiliate, CS First Boston, has provided investment banking services to Disney.