AT&T $20b bridge loan draws pricing of 75bp

Tue Mar 29, 2011 2:22pm EDT

by Michelle Sierra

NEW YORK, March 29 (RLPC) - AT&T (T.N) will pay 75 basis points over Libor if it draws on its new $20 billion bridge loan backing its acquisition of T Mobile USA from Deutsche Telekom AG <DTEGn.DE,> banking sources said. The company is looking to complete syndication of the transaction by Friday.

If the facility remains undrawn, the company will be charged a commitment fee of 8 basis points over Libor to maintain access to the money until the acquisition clears regulatory hurdles. Banking sources said the facility could ultimately be drawn given the possibility of a lengthy approval process.

Undrawn pricing is based on current ratings of A/A2. The company is offering slices of $1.5 billion and $2.5 billion of the facility to its key relationship banks, with the largest lenders expected to take the full $2.5 billion, sources said. Discussions between the company and its banks are currently taking place.

AT&T Inc's key relationship lenders include Citigroup, Barclays Capital, Bank of America Merrill Lynch, BNP Paribas, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley MUFG, RBS, UBS and Wells Fargo.

These banks are also lenders under the company's existing $8 billion revolving credit facility.

The $20 billion bridge loan is solely underwritten by JP Morgan. The bank is expected to have significantly reduced its exposure by the end of the week.

On March 20, AT&T announced plans to acquire T-Mobile from Deutsche Telekom in a cash-and-stock transaction valued at approximately $39 billion. The bridge loan will back the $25 billion cash component of the deal.

The loan is the second-largest bridge loan in the U.S. after Pfizer's $22.5 billion bridge from March 2009.

Closing of the T-Mobile acquisition is expected within the next 12 months, the company said in a presentation on Monday March 21.

Michelle Sierra Phone: 646-223-8592