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NEW YORK CITY-Carl C. Icahn is offering $1 billion is senior secured financing to the struggling CIT Group, as part of a plan which involves him changing his vote in favor of the proposed pre-packaged plan of reorganization. The contentious shareholder has also let it be known that the upfront cost to the company of the financing could be as much as “40% lower than the company paid to certain large noteholders for an equivalent $1-billion of financing,” according to a release.

As part of this offer, Icahn is telling bondholders that voted against the pre-packaged plan, at his behest, that they will receive modified terms of his tender offer. Icahn in this scenario will make sure that those nay-saying bondholders are “protected at $600 per note for 30 days,” says a release, whether or not the exchange offer/prepackaged plan fails. Icahn has been fighting the pre-packaged plan publicly and privately as the self-purported largest bondholder.

“We are pleased that CIT has made a number of changes as a result of our labors,” Icahn says in a statement. “Most importantly, CIT has now agreed to give control to the noteholders. The changes include the accelerated process for appointing new directors. CIT has also agreed to important enhancements to the second lien covenenta. These changes significantly improve corporate governance and cash flow protections, and are positive for the company and all noteholders.”

CIT says in a statement: “We are pleased to have reached this agreement with Mr. Icahn. Our ability to secure an incremental $1 billion committed line of credit from Mr. Icahn’s affiliates supports our restructuring plan and helps ensure our ability to continue to serve our existing small business and middle market customers.”

Icahn cites changes that have been made to the plan, which will better protect noteholders and help recover the investment in a more efficient manner, as reasons for the about-face. The pre-packaged bankruptcy deal will offer shareholders about 70 cents on the dollar and equity in the revamped company. The commercial lender recently expanded its senior secured credit facility by $4.5 billion maturing in 2012, primarily from bondholders. CIT Group was facing $31 billion in bond debt and is likely scheduled to file for bankruptcy this weekend or early next week.

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