Westinghouse Nears $6 Billion Credit

Despite the well-publicized woes of its finance subsidiary, Westinghouse Electric Corp. is proving to be a strong draw in the bank loan market.

A new $6 billion credit for the Pittsburgh-based company is expected to be fully underwritten today by a group of 15 to 20 banks led by Chemical Bank.

Bankers said the credit was attractively priced to compensate them for the ongoing uncertainties relating to the commercial real estate portfolio of Westinghouse Credit Corp.

As of Thursday afternoon, over $4 billion in commitments had been raised from banks invited to participate as coagents, banking sources said. That's on top of Chemical's own commitment of $600 million as lead bank.

More than Enough

A number of other banks were considered likely to sign up by today's deadline, raising the prospect that total underwriting commitments could exceed $6 billion, sources said.

Some banks were asked to commit $400 million each, while another tier of banks were asked to commit $250 apiece.

Officials at Chemical declined to comment on the underwriting effort, or the terms of the credit.

Terms of Agreement

However, banking sources said that under the new three-year credit agreement, Westinghouse initially would pay an all-in rate of 100 basis points over the London interbank offered rate.

The all-in rate, which is based on the compant's current single-A credit rating, consists of a borrowing rate of 50 basis points over Libor, an annual facility fee of 37.5 basis points, and a usage fee of 12.5 basis points. The usage fee kicks in if Westinghouse draws more than a third of the $6 billion revolver, though it remains to be seen whether that actually happens.

If Westinghouse uses more than two-thirds of the revolver, the usage fee would double to 25 basis points, sources familiar with the terms of the credit said. Pricing would also be adjusted to reflect any future changes in the company's credit rating.

The new credit essentially consolidates about $6 billion of existing credit lines at both the parent and subsidiary level. Those existing lines were designed as backstop facilities for the issuance of commercial paper by Westinghouse Electric and its finance subsidiary.

Back in the Paper Market

After announcing last month a whopping $1.68 billion third-quarter reserve - mainly reflecting its finance subsidiary's sour real estate loans - Westinghouse encountered some resistance in the commercial paper market.

However, the company is now said to be back in the commercial paper market, issuing new paper, or rolling over existing paper.

"There is a market there for them," said Daniel Di Senso, an analyst at Standard & Poor's Corp.

As a result, bankers said it is hard to predict the extent to which Westinghouse will need to draw on the new bank lines, Meanwhile, a meeting for potential members of the general be held sometime next week.

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