Jump to content
House Price Crash Forum
Sign in to follow this  
BROF

Cit Strikes Deal For $3 Billion Rescue To Avoid Bankruptcy

Recommended Posts

http://www.cnbc.com/id/31997105

CIT Group struck a deal with a group of its bondholders that will provide the lender with $3 billion in rescue financing and in the hopes of keeping it out of bankruptcy, the Wall Street Journal reported late Sunday, citing sources.

Ernst Moeksis

CIT Group headquarters

The deal includes CIT bondholders including Pacific Investment Management Co., known as Pimco; Oaktree Capital Management, and Centerbridge Silver Point, the newspaper said.

The goal of the rescue is to allow CIT to restructure outside of bankruptcy court. A formal announcement is slated for Monday, barring any unexpected developments.

CIT was in talks with bondholders most of the weekend as it tried to hammer out a rescue financing deal before markets opened and avoid bankruptcy, reports said.

According to an earlier Reuters report, talks with the bondholder group, advised by investment bank Houlihan Lokey, had the aim of announcing a deal by Monday morning.

CIT spokesman Curt Ritter declined to comment on the Reuters report.

Fallout Fears

The ripples from a potential CIT collapse could be widespread and worsen the effects of the economic downturn for some firms.

In one early sign, an Alabama hardware supplier filed for bankruptcy blaming the CIT situation for its woes. Moore-Handley said in court papers filed Friday that it was forced to seek bankruptcy protection "due to difficulties accessing funds" under their financing arrangements with CIT.

Still, the impact of CIT's demise would likely pale by comparison with the collapse of investment bank Lehman Brothers last September, analysts said.

CIT gained a bank holding company status in December so it could draw $2.33 billion of taxpayer money from the U.S. Treasury Department's Troubled Asset Relief Program. The company, however, faced a worsening liquidity crunch amid tight credit markets, forcing it to seek further help.

But the Obama administration declined CIT additional help, saying it had set high standards for granting aid to companies, leaving the embattled lender to work out a deal with private investors to avoid collapse.

Talks with JPMorgan Chase and Goldman Sachs for short-term financing did not lead to a deal, leaving the lender to try to get rescue funds from the bondholders.

CIT has about $40 billion of long-term debt, according to independent research firm CreditSights. About $1.1 billion of debt will come due in August, followed by about $2.5 billion by year-end.

The company's shares [CIT 0.70 0.29 (+70.73%) ] closed up 29 cents, or 71 percent, at 70 cents on Friday. Its shares lost 75 percent of their market value on Thursday as government talks for financing collapsed.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   292 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.