NEW YORK - AT&T Corp. persuaded eight financial firms to commit $2.5 billion each toward a $25 billion credit line by offering them fees in excess of $100 million, according to bankers familiar with the transaction.
Bank of America Corp., Bank of Tokyo-Mitsubishi Ltd., Bank One Corp., Barclays Bank, Citibank NA, Deutsche Bank AG, Industrial Bank of Japan, and Merrill Lynch & Co. have agreed to make the loans to AT&T, which last month said it would split into four companies by 2002.
BNP Paribas, which was not one of the eight banks initially asked, also committed the same amount after gaining approval from AT&T.
AT&T offered the firms commissions of at least $12.5 million to lend the money. If the company's credit ratings are cut, the fees would rise to $16 million.
AT&T plans to host another meeting Friday in New York to ask more banks to commit between $1 billion and $100 million. For committing $1 billion, a firm would be paid a fee of 30 basis points, or $3 million.
The firms rushed to lend because AT&T said it would pay fees of at least $100 million regardless of whether the credit line is used, the bankers familiar with the situation said. The New York long-distance phone and cable television company is also expected to hand out billions of dollars in fees over the next two years in connection with its breakup plan.
Last month AT&T picked Credit Suisse First Boston, Goldman Sachs Group, and Chase Manhattan Corp. to arrange the credit line, which is to help repay $26 billion of debt that comes due next year.