CIT Expands Credit Facility by $4.5 Billion
CIT Group Inc. expanded its senior secured credit facility by $4.5 billion, according to a release issued by the New York–based commercial lender.
Provided by “a diverse group of lenders, including many of the company’s bondholders,” the new tranche is secured by the same assets as an existing $3 billion credit facility and “additional collateral that becomes available as a result of the company’s refinancing of certain existing secured credit facilities.”
“This expanded credit facility will allow us to continue to serve our existing small-business and middle-market customers as we advance our restructuring plan,” said Jeffrey M. Peek, CIT chairman and chief executive officer.
The $4.5 billion tranche will mature in January 2012 and includes an option to extend all or a portion of the tranche for an additional year. The company will use the funds to refinance a portion of its existing indebtedness, “which may come due as a result of the restructuring.”
CIT also released a statement concerning a commitment offer of a new $4.5 billion term loan received from financier and CIT bondholder Carl Icahn. According to CIT: “Despite several requests from [CIT to Icahn] for information and multiple deadline extensions, the company has yet to receive a signed credit agreement and evidence of Mr. Icahn’s ability to fund the commitment. As a result of the lack of evidence that Mr. Icahn has arranged sufficient funding at this time, CIT’s board of directors determined that the best interests of the company and its stakeholders would be served by proceeding with the credit facility provided by a diverse group of lenders.”
CIT has a pre-packaged bankruptcy restructuring plan in place in the event its refinancing efforts fall through. A recent Securities and Exchange Commission filing by CIT left open the possibility of a Chapter 11 filing—an event with a proposed debt swap in place with bondholders. But the company said it could emerge from bankruptcy after as little as two months after filing.—Alison A. Nieder
