M&A

30 October, 2009

UPDATE 4-CIT, Icahn agreement brings bankruptcy closer

"We're all glad this is behind us and that we can now consummate this transaction and hopefully make bondholders some more money," said Jeff Werbalowsky, chief executive of Houlihan Lokey, the adviser to CIT bondholders. "The company did the right thing in putting this behind us, and that's where this needs to be for a quick and successful restructuring."

Whatever the outcome of the vote, Icahn will not walk away from the exchange offer he made to small bondholders, he said in his statement.

"We want to make sure that they feel like they were not disadvantaged by our now supporting the plan," he said.

FINANCING

CIT's arrangement with Icahn also includes provision for an additional $1 billion in financing from Icahn Capital.

The lender said the additional credit could be drawn as debtor-in-possession financing in the event of a bankruptcy.

The upfront cost for this financing could be 40 percent lower than credit the company secured earlier in the week, Icahn said in his statement.

The century-old lender on Wednesday arranged for $4.5 billion in financing from a group of creditors as an addition to a $3 billion loan arranged in July.

Earlier on Friday, CIT also said it had reached an agreement with Goldman Sachs Group (GS.N) that would reduce a $3 billion credit line to $2.125 billion but, critically, keep the line open during a bankruptcy. [ID:nN30404576]

Icahn was not available to comment beyond his announcement.

CIT bonds were little changed in light trading. CIT has about $65 billion in liabilities through mid-June and $800 million of debt coming due next week. (Reporting by Elinor Comlay; Additional reporting by Joseph Giannone and Walden Siew; Editing by Gerald E. McCormick, Gary Hill)

Source: http://www.reuters.com