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CIT Accepts $4.5B Loan, Avoids Bankruptcy
By Marc Tracy
Looks like prominent small-business lender CIT--last seen in the throes of a likely imminent bankruptcy filing--will live to fight another day! And not in one of the ways we would have thought. It had been offering its bondholders, whose bonds come due at the end of this month, a debt-for-equity swap, while threatening a prepackaged bankruptcy filing (which, by wiping creditors out to some degree, is not favorable for bondholders). Meanwhile, famed financier Carl Icahn, himself a big CIT bondholder (he says he owns $2 billion worth), was itching to make a $6 billion emergency loan to head off bankruptcy; he said he was also willing to pay CIT's bondholders 60 cents on the dollar to vote down the company's bankruptcy plan, should it have come to that.
But, instead, a different group of CIT's bondholders got together and offered CIT a $4.5 billion emergency loan--presumably to complement the $3 billion one it got a few months ago. CIT accepted it, after having already rejected Icahn's offer, thus staving off a Chapter 11. For now. Will the saga ever end?
Comments (0)October 28, 2009 5:40 PM
