Morgan Chase Walks After First Union Wins Lead

  • 21 Jan 2001
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J.P. Morgan Chase declined to participate in a new $225 million deal for Consolidated Graphics after First Union won the lead. Gary Wright, treasurer of the Houston-based sheetfed commercial printer, explained that the bank refused to share lead status with the rival shop. "It was a competitive bid and First Union won. You'd have to ask Chase, but if they don't lead, they don't want to play," said Wright, declining to discuss the matter further. He also declined to reveal other interested banks the company passed over to lead the loan. Wright said First Union won the mandate due to pricing. A Morgan Chase spokesman did not return calls seeking comment.

Syndication of the credit launched between late September and early October, according to Wright, closing last month. Wright attributed the lengthy process to the choosy and credit-sensitive market. "We came to market at a bad time, but there was no price flexing or major credit agreement revisions. There was a little tweaking throughout the process," he said, declining to elaborate. Consolidated Graphics is currently unrated. The new loan replaces the company's existing $245 million facility, which was underwritten by Chase Bank of Texas, according to Capital DATA Loanware. Wright said the refinancing will be used for general corporate purposes and acquisitions. He added that the company is not actively seeking businesses to purchase imminently.

The new loan is structured as a $175 million revolver and $50 million term loan. Both expire after five years. The company can increase the facility to $275 million with outside lenders without the existing group's approval. Pricing opens at 2% over LIBOR, with an unused fee of 3/8%, and is based on a grid linked to the company's leverage. The spread ranges from 11Ž 4% over LIBOR to 2 1Ž4 % over LIBOR. Wright declined to reveal the company's current leverage.

First Union is also administrative agent. BANK ONE is documentation agent. Other participants on the credit include Wells Fargo, Bank of Tokyo-Mitsubishi, Comerica Bank, Firstar Bank, Guaranty Federal Bank, Mitsubishi Trust & Banking, Bank Hapoalim, Hua Nan Commercial Bank and RBZ Finance.

  • 21 Jan 2001

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1 Bank of America Merrill Lynch (BAML) 7,026 25 11.95
2 Citi 6,449 21 10.96
3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
5 Lloyds Bank 3,615 14 6.15

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5 Credit Suisse 51,378.45 156 5.47%