First Union Sells $25 Million in Bonds for New York Giants.(Originated from The Star-Ledger, Newark, N.J.)

Aug. 19--First Union Corp. sold $25 million in bonds in a private sale for the New York Giants, as part of the football team's efforts to raise money to pay salaries and off-season costs.

The deal marks the first time a football franchise has used the private placement market as a source of financing.

First Union sold the 10-year debt Friday for the Giants, winners of Super Bowls XXI and XXV, as the football team tries to reduce its financing costs and its interest rate exposure.

Unlike traditional bank financing, the private placement market enables a corporate borrower -- in this case, the Giants -- to borrow money at a fixed-interest rate over a longer period of time and at a much better rate, said Mark Smith, First Union's senior vice president of corporate banking inNew Jersey.

Because the bonds are sold privately -- mainly to institutional investors, like insurance companies and pension funds -- such placements enable privately-held companies, like the Giants, to essentially maintain a lock on that privacy.

That's because, unlike a public bond offering, companies are not bound by the same strict regulatory rules and disclosure requirements mandated by the Securities and Exchange Commission, said Smith.

With a private placement, only a select few institutional investors, who are carefully screened by the company, are privy to any financial and nonfinancial information released by the company as part of its private offering.

"It allows some degree of privacy," said Smith. "For private companies, the private placement market is attractive for that reason."

Charlotte, North Carolina-based First Union inherited its 21-year-old relationship with the Giants through its acquisition of First Fidelity Bancorp. last year.

The Giants began their banking relationship with First Fidelity back in 1976 when the team first moved to New Jersey and started playing at the Meadowlands, said Smith.

"First Union has been a tremendous partner over the years and we are pleased with the results of this transaciton," said John K. Mara, general counsel and executive vice president for the Giants and partner in the football franchise.

"We were looking for some ways to reduce our financing costs and get more flexibility. We will be able to better meet our long term capital needs through this financing."

Smith said the private placement market is particularly appealing right now for any borrower "looking to procure long-term money on a fixed-rate basis .

"This is the time to do it," he said. "Interest rates are favorable and they can lock into a long period."

In terms of private placements, Smith described the Giant's deal as on the "low-medium" side.

Analysts said that First Union's leading a $25 million private placement wouldn't change any of their estimates, but did present the bank with a good marketing opportunity.

"This is a name client that you like to be associated with," said HaroldSchroeder, a bank analyst with Keefe, Bruyette & Woods, Inc.

The Giants' Mara said that other football teams were likely to consider similar steps in the capital markets.

"Many teams have borrowing needs and this type of transaction makes a lot of sense," said Mara. "I wouldn't be surprised if other teams made similar decisions."

Back in 1995, First Union completed a $60 million private placement for another sports franchise, the Vancouver Grizzlies.

The bank also has relationships with a number of other sport franchises, including the Charlotte Hornets, Jacksonville Jaguars, Atlanta Braves, Miami Dolphins and Carolina Panthers. However, none of those sports franchises has yet sought bonding.

Smith said he believes the private placement market will become increasing popular financing tool for sports franchises in the near future.

"I think it will," he said. "It's a unique source of financing and an advantageous way to raise capital."

First Union led 11 private placements this year, including a May offering of $30 million for Hatfield Quality Meats.

Bloomberg News contributed to this story.

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