The six banks that underwrote a now defunct $750 million refinancing for Dr Pepper/Seven-Up Cos. collected a modest drop-dead fee amounting to about $300,000 apiece.
But 13 other banks that made smaller but still sizable commitments as lead managers probably will come away empty-handed.
Unlike the six co-agents, the lead managers failed at the outset to negotiate a fee in the event the deal collapsed, bankers said.
Good-Will Gesture Unlikely
Though there was some talk late last week of a token payment to the lead managers as a good will gesture, even that prospect seemed remote.
"If people don't negotiate things at the front end they can't expect to get anything on the back end," said one unsympathetic official with one of the six underwriting banks.
"You learn from your mistakes," said on official with one of the 13 lead managers.
The fee issue will get more attention on future deals, he and other bankers agreed.
The bank loans were tied to an ambitious recapitalization of Dr Pepper that included a $600 million stock offering. Proceeds were to be used to retire high-junk bonds.
Soft IPO Market Blamed
The recapitalization unraveled last Wednesday when Dr Pepper withdrew the stock offering, citing the softening market for initial public offering.
Though there were earlier signs that the IPO was faltering - the price range was lowered a week before the offering was withdrawn - some bankers said they were surprised that the deal actually crashed.
For Bankers Trust, the withdrawal of the Dr Pepper offering was more than a blow - it was a triple whammy.
In addition to its role as lead lender on the bank refinancing, Bankers Trust was also a co-manager of the stock offering. And as an existing equity owner in Dr Pepper, the bank stood to make a huge paper profit if the company completed the stock offering.
Higher Fee Commanded
Bankers Trust got a slightly higher drop-dead fee than the other co-agents, because its underwriting commitment was a bit higher.
Bankers Trust underwrote $ 150 million of the bank refinancing, and the other five co-agents underwrote $120 million each. They were: Barclays Bank, Canadian Imperial Bank of Commerce, Chase Manhattan Bank, First National Bank of Chicago, and NationsBank Texas.
The 13 lead managers had committed $50 million each.