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7-Business: Bayer in 7.25 bln euro loan to fund Aventis buy

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TITLE:  Bayer in 7.25 bln euro loan to fund Aventis buy
SOURCE: LPC, posted at Ban-GEF email list
DATE:   November 22, 2001

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Bayer in 7.25 bln euro loan to fund Aventis buy

LONDON, Nov 22 (LPC) - German drugs and chemicals group its purchase of 
Aventis' CropScience unit, bankers said on Thursday. Bank of America, 
Deutsche Bank and JP Morgan have equally underwritten the loan which will 
finance the full cost of the acquisition, the sources said. "The bridge 
loan is an intermediate step. Bayer's priority is to have a financing 
commitment in place," one banker said. The short-term 364-day loan will 
bridge further medium to long-term capital markets issues for Bayer, which 
will become the world's second-largest agrochemicals company on completion 
of the acquisition.

Bayer declined to comment on the loan but it has said it will shortly be 
expanding its European medium term note and commercial paper programmes. 
The loan will remain as a committed but undrawn line of credit until 
Bayer's purchase of Aventis receives regulatory clearance from the U.S. 
Federal Trade Commission, which bankers expect to take a couple of months. 
"The company needs a credit line so it will be in a position to draw it and 
fund the acquisition even if it hasn't completed its capital markets 
issues," a banker said.

It is not clear whether the loan, which will be Germany's second-largest 
corporate loan this year after Daimler-Chrysler's (DCXGn.DE) $7 billion 
refinancing in June, will be syndicated further this year, banking sources 
say. Bayer is rated AA- by S&P and is on negative creditwatch. It was 
downgraded from AA in September following news of the debt-financed Aventis 
acquisition and the withdrawal of its cholesterol-lowering agent Baycol.

News of the loan follows a rush of high-grade corporate borrowing ahead of 
year end. Arranging banks are opting to launch credits rather than holding 
them on balance sheet over year end due to increased market and credit 
risk, and are looking to spread the risk by syndicating the loans to other 

As a result, several AA- rated borrowers have tapped the market ahead of 
the end of the year, including electrical engineering group ABB Ltd 
(ABBZn.VX) which is raising its debut loan, a $3 billion standby to support 
its commercial paper programme, and a 500 million pounds refinancing for 
global news and information company Reuters Group Plc (RTR.L).

French oilfield services company Schlumberger is also tapping the market 
for a $4.75 billion refinancing, which is being sold as two separate deals 
with $2 billion being placed in Europe for Schlumberger Ltd (SLB.N) and a 
$2.75 billion credit which will be sold in the US for Schlumberger 
Technology Corp, sources said.

These loans, which are the first high-grade credits to reach the loan 
market since the events of September 11, have set a new pricing benchmark 
for AA- credits of 25 basis points over LIBOR on a drawn basis, and Bayer's 
loan is expected to pay a similar interest margin, bankers say.


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