Oct. 2 (Bloomberg) -- Bain Capital LLC and Huawei Technologies Co., China's largest maker of equipment for telecommunications networks, hired five banks to arrange $1.2 billion of loans for their proposed buyout of 3Com Corp., said three people with direct knowledge of the deal.

Citigroup Inc., UBS AG, HSBC Holdings Plc, ABN Amro Holding NV and Bank of China (Hong Kong) Ltd. will arrange $800 million of five-year leveraged loans, $750 million of which will be for the takeover and $50 million to boost working capital at Marlborough, Massachusetts-based 3Com, said the people, declining to be identified because the information isn't public. Citigroup, UBS and HSBC will also underwrite an additional $400 million of short-term loans, they said.

3Com, the unprofitable maker of computer-networking equipment, on Sept. 28 said it agreed to a $2.2 billion takeover by Bain and Huawei. The purchase is expected to be completed by the first quarter of 2008. Shenzhen-based Huawei will buy 16.5 percent of 3Com to become the U.S. company's second-largest shareholder, Huawei spokesman Ross Gan said on Oct. 1.

Alex Stanton, a New York-based spokesman for Bain, didn't return phone calls seeking comment. Huawei's Gan wasn't available to comment. Buyout firms typically fund about two-thirds of the cost of an acquisition by borrowing against the target company's assets, a so-called leveraged loan.

Citigroup and UBS are advising Bain on the acquisition, and Goldman Sachs Group Inc. is advising 3Com.

Trumping Buyout Firms

3Com in March completed the acquisition of Huawei's 49 percent stake in H3C Technologies Co., a joint venture, for $882 million. The company trumped efforts by Bain, Silver Lake Partners and Huawei, who planned to borrow about $1 billion to buy 3Com's stake, bankers familiar with the situation said last November.

The U.S. will probably probe the purchase of 3Com on national security grounds, the Financial Times said on Sept. 29, citing former government employees.

The U.S. Committee on Foreign Investment looks closely at Chinese transactions involving the government's information technology, the newspaper said, citing Christopher Simkins, a former Justice Department official. Huawei's ownership of 3Com would be ``really worrisome,'' the Financial Times quoted Sami Saydjari, an Internet security expert at the Pentagon, as saying.

To contact the reporter for this story: Patricia Kuo in Hong Kong at pkuo2@bloomberg.net.

Last Updated: October 2, 2007 04:28 EDT