In its first lead lending assignment, Salomon Brothers will syndicate a $275 million loan so that Sinter Metals Inc. can acquire two units of Maag Holding AG.
The loan, fully underwritten, is the first since Salomon started its lending group in July. The investment bank is also serving as mergers and acquisitions adviser.
Richard Ivers, managing director and head of the lending group, attributed the investment bank's lead lending position to its role as adviser.
"I would expect that the advisory connection will be the primary source of transactions for us," said Mr. Ivers, formerly a managing director at CS First Boston. "We're pleased to have such a fine transaction as our first in the marketplace."
Among the investment banks that have recently entered the loan syndication business, Salomon is the last to land a lead position.
Donaldson Lufkin & Jenrette combined with BankAmerica Corp. to lead a $200 million loan for Thomas H. Lee's leveraged recapitalization of Rayovac Corp.
Morgan Stanley & Co. and Bank of Nova Scotia are expected to launch a $736 million loan today for Doubletree Corp.'s acquisition of Red Lion Hotels.
"Such syndicated lending enhances the overall relationship that the investment banks have with the business, and gives them the opportunity to sell other services," said Katrina Blecher, a bank analyst with Gruntal & Co.
These other services include bridge financing, securitizations, and equity and bond underwritings.
Other corporate treasurers will find it easier to tap Salomon to lead loans now that the company has won a lead mandate, Ms. Blecher said. "It certainly becomes more attractive for other companies to come and seek the same products," she said.
Citicorp Venture Capital, a frequent user of bank debt, is the largest shareholder of Cleveland-based Sinter.
Sinter's acquisition of the Maag units makes it the world's largest producer of precision pressed powder metal components.
Salomon Brothers will fund the transaction through the holding company, but anticipates using separate funding for future deals. Salomon will structure an 8.5-year, $235 million term loan and a 6.5-year, $40 million revolving credit.
Mellon Bank Corp. led a $50 million unsecured revolving credit for Sinter in September.
The investment bank is putting together a group of leveraged lenders for a revolving credit of up to $1 billion. The revolving credit has an opt-out provision.
Salomon expects lenders to its credit to contribute to deals the investment bank leads as well.
