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CIT Obtains $4.5 Billion Revolver, Locks Out Icahn
The CIT soap opera is developing by the minute, ahead of tomorrow exchange offer deadline expiration. In one corner shunned distressed investor Carl Icahn, who presumably owns $2 billion of CIT bonds, and is pushing for a complete shakedown at the company while offering to pay bondholders 60 cents on the dollar in order to vote down the proposed prepack plan. In the other corner is management, directors, secured lenders and some creditors, who are hoping against hope that by adopting the administration's broad practice of extend and pretend, everything will be ok. The latest gimmick pulled out of the hat: a new $4.5 billion credit facility.
Reuters reports:
Struggling commercial lender CIT Group Inc said on Wednesday it obtained $4.5 billion more of financing from its creditors, just as it seeks to complete a debt exchange.
The new financing, which adds to a $3 billion loan arranged in July, is being provided by a group of lenders including some of CIT's bondholders, the company said in a statement.
The funds will be secured by much of the same assets as the original $3 billion loan, according to the statement.
CIT said it made these arrangements after it was unable to determine whether billionaire investor Carl Icahn, who offered to provide the company with a $4.5 billion term loan on Tuesday, had arranged sufficient funding.
The 101-year-old lender is battling to restructure its debt by getting debtholders to exchange their notes, or by agreeing to a prepackaged bankruptcy plan.
While certain to infuriate Icahn, who after vacating his Yahoo board seat has much more time to allocate to this partciular pursuit, the loan procurement has in no way made the exchange offer passage a done deal. As Egan-Jones reported yesterday, the best optionality for creditors is to enforce a free-fall chapter 11 (basically Chapter 7) where the rating agency sees 90 cent recoveries. With about 24 hours to go before the final outcome is made clear on both the exchange offer and the prepack initiatives, it appears that at least one part of the Club CIT "pretending" game is about to be resolved.
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Good money after bad.
The new $4.5 billion loan is "secured by much of the same assets as the original $3 billion loan" made in July.
Total madness!
Textbook Martingale strategy in action.
The now total $7.5Bn secured loan is so over collateralized that it is money good.
Just in time to completely kill credit for small business and therefore hasten the collapse in which the largest companies will try to take over everything. Then get bought out by the Chinese, I guess.
Remember how Citi hit rock bottom at below $1.00 a share? I wonder if this pig is going to quadruple in price the same way the next few months.
you got it Ms, this is a favorite ploy, "times are hard, we're suffering!!" I'd say it will pop nicely. Incidently to those of you who think of this outfit as a nice lender to small folk - give Joe the Plumber a ring - he is small folk, unlicensed plumber making 250k who needs tax relief, get with it
They are going to turn Accounting into an X-Games event. 90' tall skateboard ramp tricks are so 2008.......
It will be a delicious development if the gutter-rat Icahn ends up losing $800 million.
Please don't insult the rats.
Why? Because a wealthy capitalist risking his own money to turn a company around is a bad thing?
The latest contender for "World's Most Expensive Penny Stock".
Big ol' stinky PoopLaGrande!
"With about 24 hours to go before the final outcome is made clear on both the exchange offer and the prepack initiatives, it appears that at least one part of the Club CIT "pretending" game is about to be resolved."
Actually, they've already extended the farce to 11/5, or after the US political elections.
"extended the closing date of the exchange offer to Nov. 5 from Oct. 29."
http://www.reuters.com/article/companyNews/idUSN2617813820091026
Oh! The drama!
What a bunch of "Drag Queens" on the road to "Bohemian Bankruptcy"
Oh mama mia let me go!
Remember, remember the 5th of Novemeber! The ponzi scheme treason and plot. I say handcuff all of them!
Carl check your emails. The answer is there.