Ah, yes, CIT Group hasn’t been able to obtain a sustainment loan (as of yet), nor have they been able to get bondholders to exchange debt to help the companies financial stability.
So what is the logical thing to do?
Offer your debt holders preferred stock and release the new ‘terms’ deal at 11:20PM, on a Friday, when the market is sleeping.
The move seemed to validate speculation that the debt-exchange offer, unveiled earlier this month, would probably fail because investors were dissatisfied with its terms. People briefed on the plan had said that a prepackaged bankruptcy, meant to shorten CIT’s time in Chapter 11 protection, was more likely.
Under the terms of CIT’s debt-exchange plan, holders of $30 billion in bonds could swap their holdings for new notes and preferred stock. The changes the company announced on Friday at 11:20 p.m. include a shortening of the new bonds’ maturities, as well as an acceleration of those notes’ repayment.
CIT Group has two major goals they face: 1) trying to close a loan of between $3.5 billion and $6 billion for paying down debt and 2) a debt restructuring. I fear that CIT is moving toward to bankruptcy regardless of what happens…
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