J.P. Morgan & Co. will lead a $1.5 billion loan for the newly merged Lockheed Corp. and Martin Marietta Corp.

Shareholders from Bethesda, Md.- based Martin Marietta and from Calabasas, Calif.-based Lockheed are expected to approve the merger on March 15. The loan, which is contingent on the merger's approval by shareholders, will be the first for the combined defense contractor.

The current facility will replace a $1 billion Morgan-led loan to Lockheed and an $800 million Martin Marietta loan that was co-led by Morgan and Bank of America.

Though defense analysts expected the merged company to go to the bank market, they were somewhat surprised that the $10 billion merger, the largest ever in the consolidating defense industry, did not use bank financing.

Some suggested that other defense mergers may follow suit with all-cash transactions, shrinking the demand for syndicated bank loans.

"More companies might try to do these transactions with paper instead of debt," said Peter Aseritis, a defense-industry analyst at CS First Boston.

If more companies make stock acquisitions, "there may be on aggregate a reduced bank need due to the increasing credit quality of the industry," said a banker.

Both Lockheed, with a senior unsecured debt rating of A-minus from Standard and Poor's, and Martin Marietta, with an A rating from S&P, are on credit watch with positive implications.

This deal is conspicuously different from Northrop Corp.'s acquisition last summer of Grumman Corp. Northrop easily secured a $2.8 billion syndicated loan led by Chase Manhattan and Chemical Banking Corp.

The Lockheed deal may "break the ice" for all-stock deals, Mr. Aseritis said.

Additionally, industry observers said that defense contractors typically do not seek bank funding for refinancing. "The industry usually doesn't refinance for dividends," said a syndicator lender. "They don't want to lever up the business and reduce their financial flexibility for such things as cash acquisitions."

To be sure, there were some analysts who thought that the merger of Lockheed and Martin Marietta did not reflect a trend towards all-stock acquisitions.

"Each circumstance requires a different set of financial considerations," said Howard Rubel, an analyst at Goldman Sachs & Co.

The relative appeal of various markets will determine the acquisition funding of choice, said a banker, not the preference in a particular sector for stock.

Regardless of how the deals are done, defense analysts said that continued consolidation is inevitable. A shrinking military budget forces the government either to allow consolidation or fire defense workers. Mr. Aseritis said that it's much easier to let companies trim market size.

The merger creates the largest American defense and aerospace company. With $23 billion in sales, the combination will surpass Boeing's $21 billion in annual sales.

Lockheed Martin Corp. will have a combined 50 million square feet of factory space. "They should retire 15-20% of that," said Mr. Aseritis.

Pricing for the unused portion of the current loan is expected to be nine basis points, and the London interbank offered rate plus 25 basis points for the drawn portion.

Market sources expect that the loan will be undrawn, serving general corporate purposes and as a back up for commercial paper.

The facility is expected to be a five-year revolving credit.

Morgan has not set a date for a bank meeting.

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