Banking units of First Chicago Corp. and Chase Manhattan Corp. are coarranging a $3 billion credit for Conagra Inc., the Omaha-based food company.
The new facility - a backup line for the issuance of commercial paper - replaces an existing $2 billion revolver for which First Chicago was the sole arranger.
Conagra also has some $2 billion of banker's acceptance lines, which remain in place.
James O'Donnell, Conagra's treasurer, said the increased size of the new credit line warranted the addition of a second bank as coaranger.
Conagra's ties to both First Chicago and Chase go back over 30 years.
"We're very relationship oriented," said Mr. O'Donnell. Indeed, Conagra went straight to First Chicago and Chase, without soliciting bids from other banks to arrange the new credit.
Under the existing credit agreement, Conagra pays an annual facility fee of slightly less than 20 basis points. Conagra will pay a lower fee for the new credit, but terms are still being negotiated, Mr. O'Donnell said.
Seeking More Bankers
Conagra is also expanding the number of lenders in its bank group, which currently numbers 24.
"We're looking at growth prospects internationally, and want to be sure we have strong relationship banks in place to accommodate our growth needs," he said.
The $3 billion credit is evenly split between a 364-day portion and a five-year part. The existing $2 billion credit was structured in three parts, but like the new deal, the average life was three years.
Conagra is an active issuer in the commercial paper market, and the expanded credit line will serve as a backstop for such issuance.
Roderick Rumreich, a credit analyst at Moody's Investors Service, said Conagra does a "substantial amount" of seasonal borrowing.
The company's commercial paper is rated Prime-2 by Moody's and its senior debt is rated Baa 1.
Makes Popular Brands
Conagra is a diversified food company with a large stable of well-known brand names. Prepared foods account for about three-quarters of the company's annual sales.
Among the company's prepared food brands are Hunt's, Wesson, Healthy Choice, Banquet, Armour, Swift Premium, Butterball, Country Pride, and Reddi-Wip.
The company also makes fertilizer and has a trading and processing operation.