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Posts Tagged ‘CIT debt for equity swap’

CIT-go into Bankruptcy?

Posted by Larry Doyle on July 21st, 2009 5:07 PM |

I thought CIT pulled the rabbit out of the hat in arranging $3 billion in financing yesterday. What happened? Let’s navigate this institution and shed some light where Wall Street may care to keep us in the dark.

The Wall Street Journal reports CIT Rescue Deal May Not be Enough to Ward Off Chapter 11:

CIT Inc.’s $3 billion rescue package from bondholders may not be enough to protect the lender from seeking bankruptcy protection, the company said in a filing Tuesday with the Securities and Exchange Commission.

So many additional questions remain, including:

> Why is the stock plummeting and why are analysts speculating it may very well file for bankruptcy?

CIT is seeking to reduce its debt burden in a tender offer for $1 billion of its bonds. CIT said in the filing if it doesn’t get enough of its outstanding floating-rate senior notes due Aug. 17 tendered, it may need to file for bankruptcy protection, absent additional financing.

CIT also said the government judged that the company needs about $4 billion in additional regulatory capital, including an extra $2.6 billion in tier-one capital, following a stress test.

Shares of CIT fell after the filing and were down 26% in recent trading at 93 cents a share.

> What did the $3 billion financing accomplish? (more…)

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