Cashing in on Disney

Lured by the prospect of powerful alliances, New York money-center banks are falling over themselves to get in on last week's acquisitions of Capital Cities/ABC Inc. and CBS Inc.

The deals-which could require as much as $20 billion in financing-have the city's largest banks scrambling to come up with the cash they hope will make the new media giants their loyal customers.

Two New York banks, Chemical and J.P. Morgan, have already won the lead positions in Westinghouse Electric Corp.'s $5.4 billion bid for CBS by committing $1 billion to the transaction.

The banks aren't talking, but sources close to the deal say they will hold a meeting Thursday to begin corralling other potential lenders for the $7.5 billion loan package, which they hope to close in September. Thirty-five senior lenders have been invited to the meeting.

It is believed that Citicorp will be named the lead bank in Walt Disney Co.'s proposed $19 billion takeover of ABC because it led a $1 billion credit to support a commercial paper offering for Disney in April. But Chemical has long held the position as ABC's head bank, and some expect that it will try to derail Citicorp's hopes of leading the acquisition on its own.

"They're probably both beating each other over the head trying to determine who does the deal," says one bank expert.

Intangible benefits

The fees the banks will receive will be several million dollars each, but that isn't much compared with the amount of money they will be providing. "The loans represent an opportunity to make very little money and gain a lot of prestige," says Salomon Brothers bank analyst Diane Glossman.

A source close to the Westinghouse deal says interest rates on the loans will be set at the London Interbank Offered Rate, the rate that the most creditworthy international banks charge each other for large loans, plus 1.75 percentage points. That works out to about 7.62%. Analysts describe the terms of the package as "aggressive," but significantly below highly leveraged rates of 2.75 points.

"It's more leveraged than most people expected," says Peter Schellbach, an analyst at Loan Pricing Corp., a database company in Manhattan. "But it's not too highly leveraged for a broadcast credit."

Experts say banks are...