U.S. lender CIT Group Inc said on Monday it secured a $3 billion credit facility from bondholders and would start a comprehensive restructuring, in moves seen crucial for the company to avoid a bankruptcy filing.
The company, which lends to nearly one million small and mid-sized businesses, also said as a first step in its recapitalization plan, it has started a cash tender offer for its outstanding floating rate senior notes due August 17.
The offer will be for $825 for each $1,000 principal amount of notes tendered on or before July 31.
The $3 billion secured term loan has a 2.5 year maturity, which CIT said is intended to provide it with liquidity necessary to ensure that its important base of small and middle market customers continues to have access to credit.
CIT said that term loan proceeds of $2 billion are committed and available today, with an additional $1 billion expected to be committed and available within 10 days.
CIT had sought emergency federal funding, but talks with the government broke down last week. The Obama administration appeared to draw a line as to how readily it would bail out troubled companies, following several big corporate bailouts over the last year.
Problems at CIT mushroomed two years ago in the wake of Chief Executive Jeffrey Peek's decision earlier in the decade to expand into subprime mortgages and student loans.
(Reporting by Megan Davies; Editing by Carol Bishopric)