NationsBank Corp. said Thursday that it had closed its whopping $12 billion syndication for WorldCom Inc.
The loan package is being used to pay for part of the telecommunications company's $45.8 billion buyout of MCI Corp., expected to close before the end of the month.
The deal ranks among the largest in bank-lending history. However, $5 billion of the package is a refinancing of loans made to the company last year.
The piece is made up of a $3.75 billion revolving credit and a four-year $1.25 billion term loan, whose maturity was extended to meet the terms of the new loan.
The WorldCom deal is among the most successful investment-grade packages to come to market this year. Volume in the investment-grade market declined more than 10% in the second quarter as investors shied away from the loans' thin margins.
Bankers credited the success to market confidence in Jackson, Miss.- based WorldCom, affirmed by a Standard & Poor's ratings upgrade on Tuesday.
Barbara Jorgensen, a principal in NationsBank's Dallas lending office, said the loan deal includes 61 participating banks that originally held the $5 billion piece along with 21 new investors.
"I think our biggest problem was that we had to allocate smaller pieces than I think many people wanted," Ms. Jorgensen said.
Thomas W. Bunn, head of syndications and leveraged finance and senior managing director of NationsBanc Montgomery Securities, trumpeted the deal as the latest example of the bank's long relationship with WorldCom.
"We have been lead financing arranger the last five years and have been very involved in financing all their acquisitions," Mr. Bunn said. "This is the crowning event for them and us in our partnership."
Charlotte, N.C.-based NationsBank took a $1 billion commitment followed by six top-tier commitments at $750 million. Those banks were: BankAmerica Corp., Barclays Bank PLC, Chase Manhattan Corp., Citicorp, J.P. Morgan & Co., and Royal Bank of Canada.
Meanwhile, Salomon Smith Barney Inc. Thursday said it had received strong investor response to WorldCom's $6.1 billion corporate bond offering, the largest since last year's $4.3 billion offering by Norfolk Southern Corp.