Commercial finance company CIT Group Inc and a group representing its bondholders have agreed on changes to the company's proposed restructuring plan as it looks shore up its finances.
The changes, announced by CIT late Friday, include a mechanism to accelerate the repayment of new notes; the shortening of maturities by six months for all new notes and junior credit facilities; and offering more equity to subordinated debt holders.
The changes would include notes maturing after 2018 in the company's exchange offer and increase the interest paid on Series B notes being offered by CIT Delaware Funding to 9 percent from 7 percent. They would also provide preferred stockholders contingent value rights in the reorganization and modify the allocation of common stock in the company's recapitalization after the exchange offers, as part of an agreement with the Treasury Department.
On October 1, CIT, founded more than a century ago, launched a debt-exchange plan as it looks to cut its debt by at least $5.7 billion.
The company, which is one of the largest lenders to small and mid-sized companies, also asked bondholders to approve a prepackaged plan of reorganization that would allow it to initiate a voluntary filing under Chapter 11 if the debt exchange failed.
CIT said on Friday that completion of either the debt exchange or a bankruptcy filing would generate significant capital and improve the company's liquidity.
The exchange offer expires at 11:59 p.m. EST on October 29.
(Reporting by Brad Dorfman)