Loan Syndication for Trident Is Completed
Manufacturers Hanover Trust Co. and coagents Chemical Bank and Bank of America wrapped up the syndication of a $440 million buyout loan for Trident NGL Inc., a joint venture formed to acquire Occidental Petroleum Corp.'s natural gas liquids business.
As of early Friday afternoon, the coagents had raised about $340 million in commitments from other banks. The final tally could wind up being slightly higher because commitments were still possible from a few stragglers by the end of the day.
The official deadline for commitments from syndicate members was originally set for Aug. 9, but banks were given an extra week because of the complexity of the credit.
An Arcane Science
There is a fairly small universe of banks that understand the natural gas liquids business, so the credit approval process was slow going at some banks that were interested in participating in the loan.
Based on the $340 million raised as of Friday afternoon, the three coagents will be left holding about $33 million each.
In the case of Manufacturers Hanover and Chemical, of course, their individual exposures will be combined when the two banks merge.
The coagents pre-syndicated $140 million of the Trident loan by signing up three banks as so-called lead managers before the general syndication.
Bank of Boston and Bank of Nova Scotia each committed $45 million as lead managers, and Long Term Credit Bank of Japan committed $50 million.
Numbers Will Drop
Those commitments will be scaled back in the allocation process.
Banks participating in the general syndicate include Arab Banking Corp. of Bahrain, Bank of Scotland, Fuji Bank and Trust, Societe Generale, and Bank of Montreal.
Trident NGL is a 50-50 joint venture of Occidental and Hicks, Muse & Co. that was formed to purchase Occidental's natural gas liquids business for $643 million.
In order to avoid having the deal classified as a highly leveraged transaction the borrowers had to make some last-minute adjustments in the capital structure of the transaction.
The credit, consisting of a $340 million term loan and a $100 million revolver, is priced at 250 basis points over the London interbank offered rate.