UPDATE 1-RLPC-Xstrata asks banks for $6 bln loan waiver

* Xstrata stabilises loan financing ahead of Glencore merger

* Asks banks to waive change of control trigger

* Pre-empts loan refinancing before merger is complete

By Tessa Walsh

LONDON, Feb 15 (Reuters) - Xstrata is asking its banks to allow $6 billion of existing syndicated loans to stay in place as it waits for approval of its $90 billion merger with Glencore, people familiar with the matter said on Wednesday.

Banks are expected to agree to waive change of control provisions which would have been triggered when Xstrata's merger with Glencore completed and could have prompted a loan refinancing, banking sources said.

The waiver will allow Xstrata to wait until the merger is completed before consolidating its jumbo loan along with billions of Glencore loans into a massive new syndicated loan and bond financing, they added.

Xstrata and Glencore are some of the biggest borrowers in the syndicated loan market and the waiver is expected to be agreed as a formality by banks eager to lend to one of the world's largest companies.

Xstrata declined to comment.

Xstrata's $6 billion loan will also act as a backstop facility to show that the company has enough working capital and liquidity for the next 18 months, a banker close to the deal said.

"The waiver will allow Xstrata to use that money. The revolving credit needed to be backstopped to allow the accountants to issue a working capital statement," he added.

Glencore has also lined up a similar $6 billion backstop loan via financial advisors Citigroup and Morgan Stanley to show that it has sufficient working capital, bankers said

Xstrata's senior management have already called its banks to offer a fee to agree the waiver by February 23rd, they added.

Deutsche Bank and JP Morgan are acting as financial advisers for Xstrata on its merger with Glencore, which is expected to get the green light despite recent opposition from shareholders.

LUCRATIVE LOAN

The new multibillion loan for the combined company is a lucrative piece of business that will confer relationship kudos and give access to significant ancillary business with the mining and commodities trading giant.

Despite their enthusiasm to lend, banks are keen to reduce their exposure to the combined company, which has previously been reliant on bank loans and is also expected to refinance some of its debt in the bond market.

Banks which have lent up to $1 billion to both companies are keen to reduce their overall exposure to avoid blowing through lending limits for individual companies, sectors, countries and ratings.

"This is the final piece in the jigsaw," a senior loan syndicator said.

"Lenders won't stand in the way of the merger but when Xstrata and Glencore are combined, it's understood that they will refinance their loans as they have more than they need. This will help banks' exposure," he added.