After a tense week of negotiations, CIT Group inc on Wednesday announced that it has entered into a $3 billion loan facility provided by a group of its major bondholders and will begin to restructure its liabilities to provide additional liquidity and improve its capital position.
CIT had previously tried and failed to get short term financing U.S. government agencies before turning to investors in the company.
The loan has a 2.5 year maturity, the bank said in a released statement. Term loan proceeds of $2 billion are committed and available today and an additional $1 billion will be available within 10 days, the bank said.
[O]ur Board of Directors, management team, advisors, and a steering committee of bondholders, who are lenders under the Term Loan Financing, are now actively focused on a restructuring plan that will better position our Company for the long term, said CIT chief executive officer and chairman Jeffrey Peek.
In its recapitalization plan, the bank has commenced a cash tender offer for its outstanding Floating Rate Senior Notes due August 1, 2009 for $825 for each $1,000 principal amount of notes tendered on or before July 31, 2009.
Lenders under the agreement today agreed to tender all of their August 17 notes, the bank said.
The recapitalization plan will include exchange offers to increase liquidity and capital.
The bank includes greater detail about the offer on a press release on its web site.