Investcorp SA has approached about a dozen potential underwriting banks to help finance a $ 425 million bid to buy convenience store operator Circle K Corp. out of bankruptcy proceedings.

The Arab-backed investor group, owner of Saks Fifth Avenue, is trying to line up more than $ 200 million in bank loans for the bid, banking sources said.

At a meeting last Friday, Investcorp partners walked bankers through the deal and asked for a response within two weeks.

Among those attending the Friday meeting were Chemical Bank and Chase Manhattan Bank.

Apart from Chemical, none of the banks has an existing lending relationship with Circle K, which filed for protection from its creditors under Chapter 11 of the federal bankruptcy code in May 1990.

Chemical's Texas Commerce Bancshares subsidiary is a member of Circle K's existing bank group. Led by Citicorp, the bank group is owed about $ 340 million.

The Only Offer to Date

It's estimated that the banks woyld recover about 50 cents to 55 cents on the dollar, under terms of the Investcorp bid.

Circle K bank loans currently trade in the low 50's, indicating that investors in the distressed-loan market expect a somewhat better deal to emerge either from Investcorp or another bidder.

Circle K bondholders stand to gain little from the Investcorp acquisition, and have been soliciting other bids. So far, though, no other offers have emerged.

A New Approach

The Federal bankruptcy court in Phoenix, which is handling the Circle K case, has scheduled a hearing in July to review bids.

In a departure from past practice, Investcorp is trying to syndicate the Circle K bank financing itself, rather than relying on a single agent bank.

Manufacturers Hanover Trust Co. underwrote $ 750 million in bank loans in 1990 for Investcorp's most prominent deal - the $1.5 billion acquisition of Saks. Bankers Trust Co. and Chemical later joined Hanover as coagents.

Late last year, just prior to its merger with Chemical, Hanover underwrote a $ 250 million financing for Color Tile, also owned by Investcorp.

The Color Tile credit flopped in the loan-syndication market, though it's not clear whether that was a factor in Investcorp's decision to approach a broader group of banks to underwrite the Circle K. credit.

Convenience-Store Losses

Banks have taken heavy losses on convenience-store financings over the years, which probably explains why Investcorp is casting a wide net to finance the Circle K deal.

While solo underwriting bids have not been ruled out, its's probably more likely that the bank financing would be underwritten on a "club" basis.

While terms are sketchy at this point, the loans likely will be priced at the upper end of the range for buyout financings.

One source suggested the borrowing rate would be at least 300 basis points over the London interbank offered rate, with fees in the 4% range.

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