RLPC-UPDATE 1-Selldown of EDF's 11 bln pounds loan on track

By Tessa Walsh

LONDON, Nov 4 (Reuters) - Selldown of the 11 billion pounds ($17.9 billion) syndicated loan backing French state-owned power company EDF's (EDF.PA) takeover of British Energy BGY.L is on track in the context of a difficult loan market, the banks arranging the loan said on Tuesday.

The arranging banks launched a senior round of syndication of the loan at the beginning of October.

Like several other multibillion acquisition loans currently in the loan market, selldown of the deal has been slowed by banking sector upheaval, but work is continuing on the deal.

"The deal has been fully underwritten by seven banks and is in the market to senior lenders. Relationship banks and a number of institutions are working on the transaction and we have some commitments," the representative said.

Consolidation, liquidity constraints and high funding costs have taken a toll on banks' appetite to lend, but banks also have to protect their future franchises and are selectively continuing to lend to close corporate relationships.

The arranging banks are planning to close senior syndication of EDF's loan before Christmas, with a wider general syndication to follow in the New Year.

"Given that the market backdrop has slowed things down, the deal is going as you would expect from a timing perspective," a representative of the arranging group said.

French newspaper Les Echos reported on Tuesday that the seven arranging banks - BNP Paribas (BNPP.PA), Societe Generale (SOGN.PA), Calyon, HSBC (HSBA.L)005.HK, Royal Bank of Scotland (RBS.L), Barclays Capital (BARC.L) and Bank of Tokyo Mitsubishi - are struggling to find additional banks to share the risk.

As the loan is underwritten, EDF has its money and committed funds at its disposal to complete the acquisition, sources said.

Like all other jumbo M&A loans currently in the market, any selldown issues and possible over-exposure are a matter for the arranging banks rather than the companies concerned, an EDF banker said.

EDF's loan is the first major loan to use reference rates to calculate LIBOR. The deal was conservatively structured with short-term maturities and generous pricing after EDF's bid was recommended by British Energy's board in September. (Editing by David Cowell)