California Apparel News

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.” On Oct. 30, Cit announced it had reached an agreement with financier and CIT bondholder Carl Icahn, who will support the company’s restructuring plan. In addition, Icahn Capital LP will provide an additional $1 billion line of credit, which CIT will draw upon if it needs additional funds beyond the $4.5 billion expansion facility.

The company also amended its offering memorandum to include a change in the makeup of CIT’s board of directors under reorganization. Under the prepackaged plan, CIT’s 13 directors will include five incumbent directors identified by the board’s current nominating and governance committee; four directors identified by the steering committee of lenders and three directors identified by bondholders who are not steering committee members.And

on Oct. 29, the exchange offers for a series of outstanding notes expired and the Financial Balloting Group began counting the votes for its restructuring plan. CIT had sent out 150,000 ballots to bondholders and other debt holders.According to a company statement, “the successful completion of either the exchange offers or plan of reorganization will generate significant capital and reduce CIT’s liquidity requirements for several years through the material reduction of the company’s outstanding debt.”

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.

The Wall Street Journal reported that the company’s debt-exchange offer “likely failed” and the company could file for bankruptcy “as soon as Sunday night or early Monday,” but CIT “is poised to enter bankruptcy with enough creditor support to approve its reorganization plan and shorten its stay in Chapter 11.”—Alison A. Nieder