Prospects of $45 billion loan for Roche receding

By Tessa Walsh

LONDON (Reuters) - The prospects of Swiss drugmaker Roche (ROG.VX) raising a $45 billion (29.3 billion pound) syndicated loan to finance the buyout of the rest of U.S. biotech group Genentech DNA.N are becoming increasingly remote.

The sheer size of the jumbo deal would eclipse today's shrinking loan market -- a fact which senior banking sources say is putting pressure on Roche to consider alternative funding options. These could be a combination of loans, bonds, equity and cash.

"The question is about size. In light of the current climate, a $45 billion loan looks large. It would have to be a combination of everything -- Roche would have to print bonds to get the deal done," a senior banker close to the deal said.

Roche reiterated on November 25 that it remained committed to its $43.7 billion bid to acquire the 44 percent of Genentech it doesn't already own.

The company has been talking to banks about a jumbo loan since July and has repeatedly said that it is confident of getting the financing in place to back the purchase, despite deteriorating market conditions.

The exact size of the loan that Roche has been seeking was never finalised, but senior bankers said that the company was discussing a $45 billion figure.

Banks, however, are not underwriting any new loans before the end of the year and the drive to deleverage their balance sheets is expected to continue well into 2009, which means that the days of mega-loans are over.

"$45 billion was always right out there, it was the top of the market even in the good old days and I just don't see that number being attainable any time soon," one head of loan syndications said.