In the world of leveraged finance, Bank of New York is not a name readily associated with top-tier financial buyers like Kohlberg Kravis Roberts & Co.
So it came as some surprise when the bank recently won a lead mandate on an almost $1 billion loan supporting the $1.5 billion acquisition of Amphenol Corp. by KKR, a firm whose name is synonymous with leveraged buyouts.
Bank of New York joins two long-term KKR bankers in its first lead position for KKR-Bankers Trust New York Corp. and Chase Manhattan Corp.
Although Bank of New York did not rank in the top 20 lead underwriters of leveraged and highly leveraged transactions in 1996, the bank may start to raise its profile in a market that has recently attracted investment banks like Merrill Lynch & Co. and Goldman Sachs & Co.
Observers said Bank of New York probably ensured itself of some lead mandates for KKR by contributing last year to the firm's record $5.8 billion buyout fund.
Chase, Bankers Trust, Bank of America, and Bank of New York all invested at least $100 million apiece in equity into the fund last year.
Administration agent Bankers Trust, syndication agent Chase, and documentation agent Bank of New York will underwrite the latest KKR loan, which is expected to come to market in February, said a source close to the deal. It will be the first leveraged buyout of the year.
Analysts said Bank of New York is making a concerted effort to play the lucrative lead role on more transactions.
"The name of the game at Bank of New York has been to play up the agenting," said Merrill Lynch analyst Judah Kraushaar.
Bank of New York led a $1.25 billion credit to refinance three existing credits last April for KKR's information, education, and media development subsidiary, K-III Communications Corp.
But its role in the credit for Amphenol is the first time the bank has been among the top three lenders backing one of KKR's major leveraged buyouts, according to Loan Pricing Corp.
Wallingford, Conn.-based Amphenol manufactures coaxial television cables, flat computer cables, and electronic connectors used in the cable television and communications industries.
Bank of New York is expected to boost its already strong communications lending capabilities this year, said market sources.
Lehman Brothers and Donaldson, Lufkin & Jenrette Inc. will co-lead a $240 million bond issue accompanying the buyout, said a KKR spokesman.
Following the announcement of the deal, Standard & Poor's Ratings Group affirmed Amphenol's BBB-minus corporate credit rating and BB-plus subordinated debt rating, and revised its rating outlook to "not meaningful" from "stable."