Hanson Said to Be Raising $11 Billion in U.S., Europe

Hanson PLC, the Anglo-American conglomerate, is raising some $11 billion in new bank loans in separate deals on both sides of the Atlantic, banking sources said.

While Hanson needs some fresh financing for its pending $2.6 billion acquisition of Beazer PLC, most of the new loans will be used to refinance bank debt from past acquisitions, including Consolidated Goldfields in 1989 and Peabody Coal Co. in 1990.

In the United States, Chemical Bank and five coagents are arranging a $4 billion loan for Hanson's American subsidiary. Funds for the Beazer acquisition, which includes the assumption of about $2 billion of debt, will come mainly from this credit.

Across the Ocean

At the same time, National Westminster Bank has been tapped to lead a new $7 billion credit for the parent company in London, banking sources said. It will replace an existing credit amounting to about $6.2 billion at current exchange rates, sources said.

A Hanson spokesman in New York could not be reached for comment.

National Westminster and other British banks are also expected to play a prominent role in the Chemical-led credit for Hanson's American subsidiary, though they are not members of the underwriting group.

In addition to Chemical, the agent banks on the $4 billion credit are Citibank, Toronto-Dominion Bank, ABM-AMRO, Swiss Bank, and Hongkong and Shanghai Bank.

Chemical underwrote $500 million, and each of the five co-agents committed $400 million, for a total of $2.5 billion.

While partly underwritten loans are sometimes viewed as a red flag by potential syndicate members, Hanson's strong reputation precludes it from having to pay for a fully underwritten deal, bankers said.

"It's almost an unnatural love affair between [Hanson] and the banks," a lender said.

Solid Track Record

Hanson has endeared itself to its banks because it consistently lives up to its financial projections.

As a result, the $4 billion credit is expected to sell handily in the market, despite the usual carping about pricing.

The loan is priced at 75 basis points over the London interbank offered rate. That is about 200 basis points below the going rate for credits classified as highly leveraged transactions, or HLTs.

Still, the new credit carries better pricing than existing Hanson bank debt.

Last year, Hanson's U.S. arm financed its purchase of Kentucky-based Peabody Coal with a Chemical-led loan priced at just 50 basis points over Libor.

The remainder of the Peabody loan will be refinanced with the proceeds from the new credit.

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