NEW YORK - Chase Manhattan Bank and Donaldson, Lufkin & Jenrette Inc. are preparing to sell a $1.2 billion loan to help 360Networks Inc. to build a fiber-optic network.

The Vancouver company, formerly known as Worldwide Fiber, opted for a loan after it was forced to cut bond and stock sales amid big swings in U.S. equities and waning demand for new bonds and stocks.

Goldman, Sachs & Co. has joined as an arranger of the loan and has underwritten $400 million. Chase and DLJ are joint lead arrangers and book managers on the loan and have underwritten $400 million each.

The loan is to be divided into two six-year loans totaling $900 million. It will be sold to banks, and a $300 million, seven-year term loan B that will be sold to institutional investors, such as mutual funds and insurance companies, sources said.

The fiber-optic telecommunications provider sold $787 million of junk bonds in April, 21% less than original expectations of $1 billion, with yields about 2 percentage points higher than similar industrial company bonds.

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