CIT amends debt exchange proposal
Seeks support from bondholders
Clint Engel -- Furniture Today, October 17, 2009
NEW YORK — CIT Group, the troubled lender to small and midsized businesses, said it was amending the terms of its debt exchange restructuring plan, hoping to entice more support from bondholders.
Among the changes aiming to sweeten the offer to holders of its roughly $29 billion in bonds is a shorter maturity for a new bond issue, more equity for the bondholders, the inclusion in the exchange of bonds maturing after 2018 -previously not part of the plan - and an increase in the interest rate on Series B notes to 9% from 7%.
The exchange offer expires Oct. 29, except for the added notes maturing after 2018, which have a Nov. 13 expiration.
The move to sweeten the pot has fueled speculation that the company, a major factoring lender to the furniture industry, ultimately will fail to get the support it needs and will opt for the pre-packaged Chapter 11 bankruptcy filing it has solicited as a backup.
"Through the completion of the exchange offers or an expedited in-court restructuring process, we will reduce the uncertainty around our business and further maximize the value of our franchise," CIT Chairman and CEO Jeffrey Peek said in a release. "Either approach is intended to ensure that CIT becomes a well-capitalized bank holding company that will serve as a source of strength for CIT Bank as we implement our new bank-centric funding model."
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