In Brief : RJR Buyout Gets Strong Response
NEW YORK — Drexel Burnham Lambert Inc. said today that because of strong demand, it has increased to $5 billion its placement of high-yield bonds to finance Kohlberg Kravis Roberts & Co.’s $25-billion buyout of RJR Nabisco Inc.
The placement, raised from $3 billion, is part of the financing for Kohlberg Kravis’ buyout of the tobacco and food company in the largest corporate takeover in history.
“Investor response was good,†a Drexel spokesman said. He said U.S. and international investors made commitments to buy more than $5 billion of the bonds. Wall Street sources said last week that the placement was attracting heavy interest and appeared oversubscribed.
“This was an attractive deal. It sold itself,†said a portfolio manager of a “junk†bond fund. He said he contacted a salesman for Drexel last week and asked to buy bonds.
“RJR is a major American corporation,†the portfolio manager added. “It looks like the buyout was done at the maximum price possible, but at a feasible level. There is a reasonable prospect that in two years RJR will be able to pay down debt,†he said, adding that a recession would not significantly hurt RJR Nabisco.
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