Issuer: Seagram
Date: October 1998
Amount: $8.5 billion
Bookrunner: Chase
No-one would expect it to be easy for a company famous for selling whisky and soft drinks to recast itself as a media giant. One small difficulty that Canada’s Seagram encountered last year was the need to raise the money to buy the music company, PolyGram, in one of the most difficult economic environments of recent times. Raising $8.5 billion of acquisition financing last autumn took a certain amount of flexibility (the revolving credit facility consisted of a $6.5 billion one-year tranche and a $2 billion two-year, eight-month tranche).
The loan, launched on September 15 and signed on October 21, was arranged by Chase (bookrunner), Citibank, Bank of Montreal and BankAmerica.
Many of those involved in the deal believed that what made it possible was the use of Market Flex. Chase has led the way in introducing this practice to the loan market. Rather than asking banks to commit to making a loan at a predetermined price, with Market Flex the price and other aspects of the loan can be decided after sounding out the level of interest.