CIT In Death Throes: It's Either $C U Next Tuesday or Bankruptcy Now

Wednesday, September 30, 2009 , , , , 0 Comments

Citigroup? Really? That was the best they could do? A bailout by any other name is still a bailout and last time I checked, $C U Next Tuesday was in absolutely no position to extend the bailout pail to toss water from anyone else's sinking ship.


Citigroup Inc. and Barclays Capital are offering to provide financing to CIT Group Inc., the commercial lender that’s struggling to avert bankruptcy, according to people familiar with the situation.

The 101-year-old company’s bondholders are also seeking to provide about $2 billion in loans as a restructuring deadline approaches tomorrow, said the people, who declined to be identified because the negotiations are private. New York-based CIT may choose other options, the people said.

CIT said in July it may seek court protection from creditors after Chief Executive Officer Jeffrey Peek failed to win a second government bailout and had to turn to bondholders for $3 billion in rescue financing. The company said in an Aug. 17 regulatory filing that it has to come up with a plan “acceptable” to the majority of a bondholder steering committee that provided it with the emergency cash by Oct. 1.

“Some sort of secured financing is a likely component of the company’s restructuring plan, launched in conjunction with a debt exchange,” Brian Charles, a debt analyst at brokerage firm RW Pressprich & Co. in New York, said in a telephone interview. CIT needs to raise $5 billion to $6 billion in financing to be able to make loans, he said.

Paging Dr Bernanke! I believe this is your cue!

Reuters says otherwise:

CIT Group Inc is nearing a plan that likely would hand the commercial lender over to its bondholders, sources familiar with the matter said on Tuesday.

CIT was preparing an exchange offer that would eliminate up to 40 percent of its more than $30 billion in outstanding debt, said the sources, who did not wish to be identified because they were not authorized to make public comments about the deal.

The plan would offer bondholders new debt secured by CIT assets, as well as nearly all of the equity in a restructured company, one source said.

If not enough bondholders agreed to the plan, the company could seek to restructure in bankruptcy court, the source said. This would result in one of the largest Chapter 11 bankruptcy-court filings in U.S. history.

There, now that sounds more like it.

Die already!

I can't claim to care about this but thought, you know, maybe dear reader might give half a rat's ass about CIT. You're welcome. Now back to the Fedbashing...

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.