CIT gets enough takes on debt repurchase program
NEW YORK -- CIT Group on Monday cleared another hurdle in its restructuring effort as it attempts to avoid bankruptcy protection, saying it has received enough offers to complete a debt repurchase program.
The embattled commercial lender, which nearly collapsed last month, said that as of Friday nearly 65% of the $1 billion in bonds due Aug. 17 have been tendered for repurchase. CIT Group has said failing to complete the offer could result in a bankruptcy filing.
The update on the tender offer comes as CIT also sweetened the offer to buy back the debt. CIT said Monday it is now paying all bondholders $875 for every $1,000 in notes tendered for repurchase.
The New York-based lender had previously offered $825 for every $1,000 in notes tendered for sale by July 31, with the price dropping to $800 for notes offered after Aug 1.
The tender offer was launched last month at the same time CIT received an emergency $3 billion loan from some of its largest bondholders. Those bondholders have all agreed to tender their notes for repurchase as part of the program, which account for about 58% of the outstanding debt.
The lender turned to, and received funding, from its bondholders only after days of round-the-clock negotiations for a government-led bailout failed.
If CIT collapsed, some experts feared it would deal a crippling blow to an economy still bleeding hundreds of thousands of jobs a month despite a nearly $800 billion federal stimulus program.
The retail sector would be hit especially hard. CIT serves as short-term financier to about 2,000 vendors that supply merchandise to 300,000 stores, according to the National Retail Federation. Analysts say 60% of the apparel industry depends on CIT for financing.
CIT received $2.3 billion from the government's Troubled Asset Relief Program last fall — money that could be lost if CIT files for bankruptcy.
