CIT ora intenta a rccogliere il 90% di adesioni allo swap sul bond da 1 mld $ in scadenza ad agosto. Solo chi aderisce entro il 31 luglio riceve 82,5/100 (un haircut del 17,5%) mentre chi aderirà entro il 14 agosto riceverà solo 77,5/100.
Se non si raggiungesse il 90% di adesioni, il loan da 3 mld $ non potrà essere adoperato per ripagare il bond, come da accordi e dunque CIT dovrà fare il filing per il Ch 11...
CIT Reworks Tender to Punish Late Exchange of Notes (Update2)
uly 24 (Bloomberg) --
CIT Group Inc., the 101-year-old commercial lender seeking to avoid collapse, reworked its tender offer for $1 billion of notes maturing next month to encourage investors to deliver the debt to the company sooner.
Investors tendering their notes by July 31 will get $775 plus a $50 early delivery payment for every $1,000 of securities they own, the company said today in a regulatory
filing. That compares with a previous offer of $800 plus an early payment of $25, CIT said. Those who tender their bonds after July 31 will get $775 per $1,000, down from a previous offer of $800, the company said in the filing. The offer expires on Aug. 14.
If the offer fails to get 90 percent participation, the terms of the $3 billion rescue financing that CIT got from its
bondholders this week don’t allow the funds to be used to repay the debt and the company may have to file for bankruptcy, according to the filing. CIT doesn’t “intend” to file for bankruptcy if the tender is completed, though “there can be no assurance” its attempt to restructure out of court will succeed, the company said.
“It’s hard for financial companies to be coercive in tenders and exchanges because if they talk about how they might need to file for bankruptcy, their business gets worse,” said
Kevin Starke, an analyst at CRT Capital Group LLC in Stamford, Connecticut.
$1.5 Billion Loss
New York-based CIT, which has reported $3 billion of losses in the last eight quarters, said in another filing this week that it expects to report a
loss of more than $1.5 billion for the second quarter. The company also said its “existing liquidity” isn’t enough to repay the $1 billion of floating- rate notes maturing on Aug. 17.
The securities rose 2.125 cents to 81.5 cents on the dollar as of 10:01 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. CIT
shares rose 17 cents to 91 cents in New York Stock Exchange composite trading.
Six bondholders provided CIT with the rescue loan to help the company avert a failure. Newport Beach, California-based Pacific Investment Management Co., Centerbridge Partners LP in New York, Los Angeles-based Oaktree Capital Management LLC, Boston-based hedge fund Baupost Group LLC, Capital Research & Management Co. of Los Angeles, and Silver Point Capital LP in Greenwich, Connecticut comprised the group. London-based Barclays Plc arranged the funding.
Pre-Packaged Bankruptcy
If the tender offer for the August notes succeeds, the lenders should require CIT to try to restructure out of court through debt exchanges with a pre-packaged bankruptcy option,
Jeffrey Werbalowsky, chief executive officer of bondholder adviser Houlihan Lokey Howard & Zukin, said on a call with creditors this week, according to a person familiar with the matter who declined to be identified because the discussions were private.
A pre-packaged bankruptcy is likely under the plan because it will be difficult to get almost all of CIT’s bondholders to agree to reduce their claims out of court, according to another person familiar with the advisers’ thinking.
Should the tender offer fail, Houlihan will recommend the bondholders allow CIT to file for bankruptcy before paying the August maturity, said the person. This would be in the form of a pre-arranged bankruptcy, the person said.
CIT, led by Chairman and Chief Executive Officer
Jeffrey Peek, said in the regulatory filing that the bondholder group agreed to swap all their August notes in the tender. The group owns less than half the securities outstanding, Werbalowsky said on the call, the people said.
