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Citigroup to Lend Koch Billions

Citigroup is lending Koch Industries $11 billion to help finance its proposed $13.2 billion acquisition of Georgia-Pacific Corp according to reports. The reports said the financing is believed to be one of the largest loans on record by a single bank. Furthermore, the $21 billion acquisition ? which includes the assumption of debt ? is believed to be the largest takeover of a privately held industrial company, according to news sources.

Koch is the second-largest privately held company, behind Cargill Inc. However, after the deal is completed, Koch will vault ahead of Cargill to become the largest private company in the world. Citigroup is not likely to put up all of the money once the deal is inked. Rather, it is likely that the financial giant will syndicate the loan to other investors, probably institutions.

In the first nine months of this year, global syndicated loan volume surged 28.3 percent, to $2.3 trillion, compared with $1.9 trillion in the prior year period, according to Thomson Financial. In the third quarter alone, global syndicated lending volume totaled $722.1 billion, up from $626.1 billion in the third quarter of 2004. A major reason for the strong growth is merger activity, noted Thomson officials.