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CIT Launches Two Parallel Restructuring Processes, One Of Which Is Solicitation For Prepackaged Bankruptcy
In a press release just issued, CIT has announced it is launching two parallel restructuring processes, spearheaded by company advisors Evercore (headed by former disgraced Deputy Secretary of the Treasury, Roger Altman), Morgan Stanley and FTI consulting. One of these will be a variety of exchange offers geared to provide a $5.7 billion (at least) reduction in the firm's debt load; in return tendering bondholders would receive a pro rata share of new 4 to 8 year secured notes, and/or shares of newly issued voting stock. We presume this means that any old/existing preferred/common stock become wiped out. In the second process CIT is soliciting bondholders to approve a pre-packaged plan of reorganization, so "the company can proceeds with a voluntary bankruptcy filing." Thus, the company has confirmed that, contrary to Jim Cramer's recommendations, its existing stock is now completely worthless. Dear Jim - you are now dishonorably inducted in the Dick Bove club of "advisors" who vociferously pitch companies merely days ahead of their bankruptcy filing. Welcome and enjoy your stay.
From the press release:
“Over the last several months, CIT’s management, together with its Board of Directors and outside advisors, has developed a comprehensive plan to position CIT for future success,” said Jeffrey M. Peek, Chairman and CEO. “We believe this plan maximizes franchise value and can be executed quickly and effectively through a series of voluntary debt exchange offers or an expedited in-court restructuring process. Upon completion of either alternative, CIT will be a well-funded bank holding company with a strong capital position and market leading franchises.
“We have the liquidity to serve our small business and middle market clients throughout this process,” Mr. Peek continued. “On behalf of CIT, I want to thank our clients for their continued support during this process and also thank our employees whose commitment is crucial to the future of CIT.”
Jeff Werbalowsky of Houlihan Lokey, the financial advisor to the Steering Committee, commented, “The Committee has worked very constructively with the Company and has approved its plan. Through the restructuring and substantial deleveraging featured in this plan, whether completed in or out of court, we are very confident that CIT will emerge as a strong bank holding company with renewed earnings and profitability potential.”
Comprehensive Series of Exchange Offers
CIT has initiated a series of voluntary exchange offers designed to recapitalize its balance sheet and significantly reduce its debt in an out-of-court restructuring. Successful completion of the exchange offers will generate significant capital and provide multi-year liquidity through the material reduction of CIT's outstanding debt.
Under the terms of the exchange offers, a tendering holder of an existing debt security would receive a pro rata portion of each of five series of newly issued secured notes, with maturities ranging from four to eight years, and/or shares of newly issued voting preferred stock. Consideration offered varies in amount and type based on issuer, maturity and position in the capital structure.
The exchange offers are conditioned upon achieving acceptable liquidity and leverage. These conditions require that the exchange offers cannot be consummated if the face amount of the Company's total debt is not reduced by at least $5.7 billion in aggregate, with specific debt reduction targets for the periods from 2009 to 2012, as more fully described in the offering memorandum.
The exchange offers are set to expire at 11:59 pm, New York City time, on Thursday, October 29, 2009. Tendered securities may be validly withdrawn at any time prior to the expiration date.
Solicitation for Potential Voluntary Prepackaged Chapter 11 Reorganization
CIT is also soliciting most bondholders and other holders of CIT debt to approve a prepackaged plan of reorganization so that the Company has the option to proceed with a voluntary bankruptcy filing. The Company believes that such a bankruptcy process could be resolved expeditiously with minimal disruption to its business. In this process, CIT Bank and CIT’s operating entities would not file for bankruptcy, which will allow the Company to continue to service its customers.
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Every day is "opposites' day" in Jim Cramer's world.
Comcast is getting Real Value buying that network, Fer Sher.
I'd better hurry up and buy this stock before they go bankrupt.
spit
"Equity" has taken on such a comedic irony...
Question for you security lawyers types: Is it illegal to use material, nonpublic information to encourage people to buy into a stock so that you can assist the exit of others?
Just curious. Definitely not saying anything like that happened. But ... hmmm...
Stupid do do dumb.
maybe cramer will self flagulate and induct himself into his own wall of shame
They better think of something else
Bonds are going vertical, signaling systemic stress...
LOL....
3-Month 0.000 12/31/2009 0.09/
.09 -0.013 / -.013 23:00 6-Month 0.000 04/01/2010 0.14
/
.14 -0.025 / -.025 23:00 12-Month 0.000 09/23/2010 0.34
/
.34 -0.036 / -.037 23:00 2-Year 1.000 09/30/2011 100-08½
/
.87 0-05 / -.079 23:05 3-Year 1.375 09/15/2012 100-04+
/
1.32 0-09½ / -.103 23:16 5-Year 2.375 09/30/2014 101-00+
/
2.16 0-23½ / -.156 23:18 7-Year 3.000 09/30/2016 101-15
/
2.77 1-02 / -.168 23:08 10-Year 3.625 08/15/2019 103-30
/
3.16 1-08+ / -.148 23:23 30-Year 4.500 08/15/2039 109-31
/
3.93 2-07 / -.120 23:22
Can't help it tonight, I feel a sense of deep forboding.
Soon ZeroHedge's war will be won, the truth self evident, the building at the end of the movie burning, and soon the last thing we all will be worrying about will be economics and finance.
Tonight I hear the ghosts speaking...
Mad Season - River of Deceit
http://www.youtube.com/watch?v=ClRfnUhVjmI
Excellent. Thanks
what was kramers response the next day after he gave it the two thumbs?
If you really want a treat head over to the yahoo boards
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/forumview...
75% of these people think CIT will be over $4/share tomorrow because this deal is "good news"
Cramer is a true BLOW HARD. I think any intelligent observer has come to the conclusion that he has issues stemming from childhood that have given him the urge to profusely spew the last unintelligible stream of consciousness as worthless as diarreah in it's sum total.
The Gerber is being spooned. From the Yahoo.
http://finance.yahoo.com/news/Bondholders-committee-board-apf-3735372917...
The company said late Thursday that its restructuring plan has been approved by its board and by the steering committee of its bondholders. Under terms of the deal, bondholders would exchange their current notes for a portion of five series of newly issued secured notes, with maturities ranging from four to eight years, and/or newly issued preferred shares.
snip
CIT said it has been told by advisers to the steering committee that holders of about $10 billion worth of unsecured debt have already indicated they intend to participate in the debt swap or vote for the prepackaged bankruptcy plan.
"The committee has worked very constructively with the company and has approved its plan," said Jeff Werbalowsky of Houlihan Lokey, the financial adviser to the bondholders' steering committee. "Through the restructuring and substantial deleveraging featured in this plan, whether completed in or out of court, we are very confident that CIT will emerge as a strong bank holding company with renewed earnings and profitability potential."
That last part was brilliant.
Tis just a flesh wound!