X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

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.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt. APARTMENTS SPRING 2021Event

Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.