NEW YORK, Dec 7: Citibank and J.P. Morgan Chase & Co, the top lenders in mergers and acquisition finance, aren’t facing challenges lining up banks to participate in a $1.5 billion loan to Enron Corp, executives familiar with the situation said.

The two banks agreed on Monday to provide the troubled energy company with $1.5 billion in so-called debtor-in-possession financing. The money gives Enron cash to continue running its business while it reorganizes under Chapter 11 bankruptcy protection.

The syndication of the loan is at very early stages and term sheets have yet to be sent to banks to solicit participation. But early indications are that the two banks won’t have any trouble lining up syndicate banks for several reasons, these people said.

Under the terms of the deal, Enron gains access to $250m immediately, and will get an additional $250m in coming weeks when it provides lenders with a satisfactory business plan, according to an Enron statement Monday.

A further $1 billion will be available to Enron when certain conditions are met, including successful syndication, which is when tranches of a loan are farmed out to other banks.

For one thing, the loan is backed by collateral including proceeds from the sale of Portland General, an Oregon utility that Enron agreed to sell to Northwest Natural Gas.—Reuters