NEW YORK - Chemical Banking Corp. is closing syndication today on a total of $7 billion of financing for the ITT Corp. for its breakup into three publicly traded companies.
The loan will serve as a commercial paper backstop for the three fledgling investment-grade companies.
Along with a handful of other companies, the conglomerate is bucking the merger trend, electing instead to divide itself into separate publicly traded companies.
Bankers said the deal presented an opportunity to get in on the ground floor with companies that will have their own financing needs.
Despite its size, the loan was oversubscribed prior to closing, with approximately 20 banks committing $300 million at the co-arranger level.
The lowest tier on the loans was $50 million.
The reaction "reflects the fact that the loan market views this spinoff just as favorably as the stock market views it," said a loan syndicator.
ITT Industries, which includes the automotive, defense, and electronics divisions, is seeking a $3 billion facility, which is divided into one-year and a five-year tranches.
The facility fees on the one-year piece range from 5.5 basis points to 7.5 basis points, depending on the company's forthcoming debt rating. The fee will be from 8 to 9.5 basis points on the longer piece.
The world's largest hotel and gaming company, the ITT Corp. is also seeking $3 billion, which is similarly divided between a one- and five-year piece. Facility fees are identical to that for ITT Industries.
The third facility, a $1 billion five-year loan, supports ITT Hartford, the company's insurance division, and has a facility fee of 7 to 8 basis points.
