Independent research firm CreditSights Inc., is of the opinion CIT Group (NYSE:CIT) bondholders should get rid of their investments as efforts by the century old commercial lender to restructure have “very little hope of succeeding”.
CIT Group’s CEO J. Peak wants to cut at least $5.7 billion of his co.’s debt through a swap of unsecured obligations for preferred shares and new secured notes maturing later. CIT has asked bondholders to exchange unsecured obligations for either new secured debt maturing in 4-8 years, preferred shares or a combination. The New York-based firm, which is trying to avoid collapse and return to profitability after nine quarters of losses, is also seeking protection from creditors through a prepackaged bankruptcy in case it misses the exchange target.
“Currently CIT’s interest expense is too high, it cannot borrow economically to fund new business, and its liquidity is stressed,” three CreditSights analysts wrote in an Oct. 4 report. “After digging through the details of the exchange offer and subsequent liquidity plans, we believe CIT’s plan has very little hope of succeeding.” [Bloomberg]
The New York-based CIT has lost $5 billion in the last two years.
Shares of CIT are up 3 cents, or 2.56%, to $1.20, rtq, in midday trading.