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CIT Goas Ahead With Restructuring Plan

Commences offers to exchange certain outstanding series of notes and solicits votes for voluntary prepackaged plan of reorganisation

CIT Group, a provider of financing to small businesses and middle market companies, has commenced restructuring of its capital structure that has been approved by the company’s board of directors and by the steering committee of CIT’s bondholders. CIT has initiated a series of voluntary exchange offers designed to recapitalise its balance sheet and significantly reduce its debt in an out-of-court restructuring.

Under the terms of the exchange offers, a tendering holder of an existing debt security would receive a pro rata portion of each of five series of newly issued secured notes, with maturities ranging from four to eight years, and/or shares of newly issued voting preferred stock. If the company does not achieve the objectives of the exchange offers, it may decide to initiate a voluntary filing under Chapter 11 of the US Bankruptcy Code. Therefore, it is concurrently soliciting bondholders and other holders of CIT debt to approve a prepackaged plan of reorganisation. The company has been informed by advisors to the steering committee that, subject to review of the offering memorandum, approximately $10 billion of outstanding unsecured indebtedness have already indicated their intention to participate in the exchange offer or vote for the prepackaged plan of reorganization.

Jeffrey Peek, chairman and CEO, said: “We believe this plan maximises franchise value and can be executed quickly and effectively through a series of voluntary debt exchange offers or an expedited in-court restructuring process. Upon completion of either alternative, CIT will be a well-funded bank holding company with a strong capital position and market leading franchises. We have the liquidity to serve our small business and middle market clients throughout this process. On behalf of CIT, I want to thank our clients for their continued support during this process and also thank our employees whose commitment is crucial to the future of CIT.”

Jeff Werbalowsky, financial advisor to the steering committee of Houlihan Lokey, said: “The committee has worked very constructively with the company and has approved its plan. Through the restructuring and substantial deleveraging featured in this plan, whether completed in or out of court, we are very confident that CIT will emerge as a strong bank holding company with renewed earnings and profitability potential.”

New York-based CIT is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses.