By Paritosh Bansal
NEW YORK, Oct 14 (Reuters) - CIT Group Inc is getting closer to finalizing the terms of a new loan that would give the commercial lender, trying to avoid bankrutpcy, $3 billion to $6.5 billion, two sources familiar with the matter said on Wednesday.
The loan, being arranged by Bank of America, could be finalized as soon as this week, the sources said, declining to be identified because talks are private. One of the sources warned that the situation was fluid and the loan could be delayed.
CIT would use most of the additional money, except about $500 million, to repay existing debt, the sources said.
CIT spokesman Curt Ritter declined to comment.
The lender to small- and medium-sized businesses said earlier this month it was looking for investors to approve a large debt exchange that would reduce its borrowings, or to approve a prepackaged bankruptcy.
The company's debt exchange aims to reduce CIT's borrowings by at least $5.7 billion, with specific targets for lowering the company's liabilities through 2012. The exchange offer expires on Oct. 29.
For the 12 months ending August 31, 2010, CIT's unsecured debt funding needs are about $7.6 billion.
The loan would work as a secured facility in case of a successful exchange offer by the lender, or a debtor-in-possession loan if CIT has to file for bankruptcy, one source said.
'They have got people who are willing to step up for large commitments,' the second source said. 'It's mostly the people who were in the first deal.'
The company got an emergency $3 billion loan from a group of its bondholders in July. Those included: Pacific Investment Management Co, Baupost Group, Centerbridge Partners LP, Oaktree Capital Management, Capital Research & Management Co and Silver Point Capital.
PIMCO and Baupost have since quit a steering committee of the bondholders.
The company said on Tuesday its Chief Executive Jeffrey Peek was retiring and its board of directors was forming a committee to search for a successor.
In December 2008, the company secured $2.3 billion of financing from the government's Troubled Asset Relief Program, but by the middle of 2009, CIT needed more help. The company pressed for more U.S. taxpayer support, but was refused.
CIT has roughly 1 million customers and more than $70 billion of assets, but many of its borrowers are struggling amid the worst recession since the Great Depression.
CIT's shares closed up 14 cents, or 15.2 percent, at $1.06 during late trading on the New York Stock Exchange.
(Reporting by Paritosh Bansal; editing by Carol Bishopric, Leslie Gevirtz)
(For more M&A news and our DealZone blog, go to http://www.reuters.com/deals) Keywords: CIT/ (paritosh.bansal@thomsonreuters.com +1 646 223 6113; Reuters Messaging: paritosh.bansal.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Oct 14 (Reuters) - CIT Group Inc is getting closer to finalizing the terms of a new loan that would give the commercial lender, trying to avoid bankrutpcy, $3 billion to $6.5 billion, two sources familiar with the matter said on Wednesday.
The loan, being arranged by Bank of America, could be finalized as soon as this week, the sources said, declining to be identified because talks are private. One of the sources warned that the situation was fluid and the loan could be delayed.
CIT would use most of the additional money, except about $500 million, to repay existing debt, the sources said.
CIT spokesman Curt Ritter declined to comment.
The lender to small- and medium-sized businesses said earlier this month it was looking for investors to approve a large debt exchange that would reduce its borrowings, or to approve a prepackaged bankruptcy.
The company's debt exchange aims to reduce CIT's borrowings by at least $5.7 billion, with specific targets for lowering the company's liabilities through 2012. The exchange offer expires on Oct. 29.
For the 12 months ending August 31, 2010, CIT's unsecured debt funding needs are about $7.6 billion.
The loan would work as a secured facility in case of a successful exchange offer by the lender, or a debtor-in-possession loan if CIT has to file for bankruptcy, one source said.
'They have got people who are willing to step up for large commitments,' the second source said. 'It's mostly the people who were in the first deal.'
The company got an emergency $3 billion loan from a group of its bondholders in July. Those included: Pacific Investment Management Co, Baupost Group, Centerbridge Partners LP, Oaktree Capital Management, Capital Research & Management Co and Silver Point Capital.
PIMCO and Baupost have since quit a steering committee of the bondholders.
The company said on Tuesday its Chief Executive Jeffrey Peek was retiring and its board of directors was forming a committee to search for a successor.
In December 2008, the company secured $2.3 billion of financing from the government's Troubled Asset Relief Program, but by the middle of 2009, CIT needed more help. The company pressed for more U.S. taxpayer support, but was refused.
CIT has roughly 1 million customers and more than $70 billion of assets, but many of its borrowers are struggling amid the worst recession since the Great Depression.
CIT's shares closed up 14 cents, or 15.2 percent, at $1.06 during late trading on the New York Stock Exchange.
(Reporting by Paritosh Bansal; editing by Carol Bishopric, Leslie Gevirtz)
(For more M&A news and our DealZone blog, go to http://www.reuters.com/deals) Keywords: CIT/ (paritosh.bansal@thomsonreuters.com +1 646 223 6113; Reuters Messaging: paritosh.bansal.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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