Icahn Discloses Plans For CIT
CIT is now certain to file for bankruptcy over the weekend, after it was unable to obtain the requsite number of consents for its exchange offer. The only question is whether or not the bankruptcy will be a pre-packaged, in which bondholders will accept specific haircuts or if it will be a free fall Chapter 11, which would likely promptly devolve into a Chapter 7 liquidation, if creditors are unable to come to a non-blocking agreement. In an odd development today the firm announced that it had chosen Icahn to provide an incremental $1 billion DIP for when the company does file. By doing so, the BOD and the executive committee basically kissed their jobs goodbye: Icahn has been vocal and extremely critical of everyone at the fancy-lobbied firm at 505 Fifth.
With the new priming financing, Icahn will further lower his cost basis, and raise his weighted average holdings in the firm's capital structure. Icahn has already stated that he is the largest holder of company bonds, which has as of yet been unconfirmed. We expect one of the affidavits to be filed promptly at Bowling Green on Sunday to confirm or deny this claim.
In the meantime, the below interview by Fox Business News with Icahn should bring some clarity for the plans that the corporate raider has for this most recent conquest. One only hopes that this most recent venture will be more successful than Federal Mogul which likely cost Icahn several years of his life, and not to mention a few hundred million.