Raytheon Co. is not expected to seek new bank financing for its plan to buy Texas Instruments' defense electronics holdings for $2.95 billion in cash.

Instead, Raytheon is expected to fund the purchase with an existing $3 billion five-year revolving credit facility arranged in 1995, when it shelled out $2.3 billion to buy defense-electronics producer E-Systems.

The unsecured investment-grade credit was syndicated in April 1995 by Chase Manhattan Corp. and Chemical Banking Corp. as syndication and administrative agents, respectively, and by documentation agent BankAmerica Corp.

Market sources said that the loan is still priced at market value, but that Raytheon may return to the bank loan market with new terms this year.

The $3 billion revolver is priced at 12.75 basis points over the London interbank offered rate, with an annual fee of 6 basis points tied to a grid based on the company's senior unsecured debt rating, according to Loan Pricing Corp.

Raytheon's debt will total $6.6 billion after its deal for Texas Instruments closes in the second quarter, said Peter D'Angelo, Raytheon's chief financial officer. That's nearly double it's 1996 yearend level.

The Lexington, Mass.-based defense and commercial electronics manufacturer will probably go to the bank and capital markets to refinance its debt later this year.

"With the powerful cash flow we have, we can pay down that debt in five years," said Mr. D'Angelo, who spoke to reporters Monday. And if the company refinances at a lower rate, it can pay off its debt even sooner.

The Texas Instruments deal is the first to be announced in the quickly consolidating defense and aerospace industry this year. The merger trend culminated late last year when aerospace giant Boeing announced a $14 billion stock acquisition of McDonnell-Douglass.

General Motors Corp.'s Hughes Electronics unit is expected to be the industry's next merger target. By engaging to pay Texas Instruments in cash, Raytheon is considered to have positioned itself well to bid for Hughes.

Despite commercial banks' efforts over the past year to strengthen their merger and acquisition groups, they were "not even a factor" as competitors to advise Raytheon in the purchase, said Michael Urfierer, a senior managing director at Bear, Stearns & Co., which acted as adviser to Raytheon.

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