CIT eyes bankruptcy if debt exchange plan fails
(AFP) – 3 Oct 2009
WASHINGTON — Ailing lending giant CIT Group warned Friday it might file for bankruptcy if it failed to launch a comprehensive debt-exchange plan to beef up capital levels.
The company, which provides financing to small businesses and middle market companies, said it had commenced a restructuring of its capital structure approved by its board and bondholders.
Under the plan, CIT’s bondholders with some 10 billion dollars of outstanding unsecured indebtedness indicated they will participate in the exchange offer or vote for the prepackaged plan of reorganization, the company said in a statement.
CIT, which ran into financial problems after a home mortgage meltdown plunged the country into its worst crisis in decades, has about 40 billion dollars of long-term debt, reports have said.
The company said that the debt exchange offers were conditional upon achieving a debt reduction of at least 5.7 billion dollars, with specific targets for the periods from 2009 to 2012.
The exchange offers are set to expire on October 29.
“We believe this plan maximizes franchise value and can be executed quickly and effectively through a series of voluntary debt exchange offers or an expedited in-court restructuring process,” CIT chief executive Jeffrey Peek said in a statement.
“Upon completion of either alternative, CIT will be a well-funded bank holding company with a strong capital position and market leading franchises,” he said.
But “if the company does not achieve the objectives of the exchange offers, it may decide to initiate a voluntary filing under Chapter 11 of the US Bankruptcy Code,” the statement said.
CIT was rescued from almost certain bankruptcy by some of its largest bondholders in July in a three-billion-dollar emergency agreement after the US government rejected the company’s plea for a fresh bailout.
———————
Athens Georgia bankruptcy lawyer | Bankruptcy attorneys in Athens GA and Athens-Clarke County – Filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy
http://www.athensbankruptcy.com
Comments on this entry are closed.