CIT Group Bankruptcy Still a Possibility after $6 Billion Carl Icahn Loan
Posted on | October 19, 2009 | No Comments
In a regulatory filing on Monday CIT Group warned that they still might have to file for bankruptcy protection even after investor Carl Icahn has offered to underwrite a $6 billion loan to the company. Reports show that the offer would save CIT Group up to $150 million in fees. CIT Group is a New York based lender to small and medium sized businesses. Some of its customers include Dunkin’ Donuts, Dillards and approximately 2000 venders that supply inventory and merchandise to 300,000 stores.
CIT Group is attempting to reduce its near-term debt to $5.7 billion. In a new offer to bondholders the investors will receive a better interest rate and short maturities. The revised offer would give the government even more stake in the lender. The government has already given the struggling lender $2.3 billion in assistance.
CIT Group’s losses continue to grow as its borrowing costs have outweighed its income throughout the current recession. In addition to the $2.3 billion in government aid, the company also received a $3 billion emergency loan from some of its larger bondholders. If the new offer goes through, the Treasury Department would have a 5.4% stake in the company as opposed to a 2.4% stake from the original plan that was offered at the beginning of October.
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Author: Alan Lake
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