CIT Group was close to securing a deal with bondholders on Sunday which would relieve a liquidity crunch at the U.S. lender which threatens the bank with the prospect of filing for bankruptcy, the Wall Street Journal reported.
The company’s board was considering the offer as of Sunday night but it won’t permanently fix the company’s long term financing needs, unidentified people involved in the transaction told the Journal. Bondholders calculated that they would lose more if the bank filed for bankruptcy, according to the report.
The final terms sheet still needs to be reviewed by various financial and legal advisers, people familiar with the matter told the Journal, noting there is a chance the deal could still falter over last minute negotiations.
An Obama official told the Journal in a report issued Saturday that CIT had planned for government assistance as a first and second resort.
“Their Plan A was: Seek assistance from the government … And their Plan B was: ask again,” the official said, according to a report published on Saturday.
Last weekened, CIT and government agencies began to discuss ways the government could assist, however by Wednesday, the U.S. Treasury said the government would not provide financing to help the company.
A CIT spokesman told the Journal the company had taken steps to “stabilize” its funding model, manage its expenses and maintain its liquidity, according to Saturday’s report.