Looks like a temporary credit line deal may be imminent:
CIT Group Inc., the 101-year-old commercial finance company seeking to avoid collapse, is considering an offer from some of its largest bondholders to provide $3 billion in bridge financing, according to two people briefed on the firm’s deliberations.
The lender’s board was scheduled to meet today to discuss the offer, which would give the New York-based company a chance to restructure its debt outside of bankruptcy, said one of the people, who declined to be identified because the talks are confidential.
CIT needs time to strike deals with bondholders to reduce debt after the U.S. wouldn’t give the firm a second bailout. CIT, which has reported $3 billion of losses in the last eight quarters, received $2.33 billion in funds from the U.S. Treasury in December and hasn’t been given access to the Federal Deposit Insurance Corp.’s debt-guarantee program.
This will provide CIT Group time to do a debt for equity swap.
Sounds like good money after bad . . .
CIT Group Said to Weigh $3 Billion Financing Offer
Pierre Paulden and Linda Shen
Bloomberg, July 19 , 2009
Bondholders Plan CIT Rescue
JEFFREY MCCRACKEN and SERENA NG
WSJ, JULY 20, 2009
CIT Is Near Deal for $3 Billion Loan to Avert Bankruptcy
MICHAEL J. de la MERCED
NYT, July 19, 2009