Struggling commercial lender CIT Group (CIT) said Wednesday it obtained $4.5 billion in credit from a diverse group of investors that included some of its biggest bondholders.
The new financing, which was arranged by Bank of America/Merrill (BAC) and supplements a $3 billion loan that CIT received from several large investors in late August, is being provided by a group of lenders including some of CIT’s bondholders, the company said in a statement. The announcement was made 24 hours before the expiration of a massive debt exchange meant to keep the company out of bankruptcy.
“We believe this secured financing will serve the best interests of all stakeholders and will allow us to better position CIT for the future,” CIT Chairman and CEO Jeffrey Peek said in a statement.
The New York-based lender, which has been trying for months to restructure its operations and reduce its debt burden to avoid bankruptcy, said it made the new arrangements after it was unable to determine whether billionaire investor Carl Icahn, who had offered to provide the company with a $4.5 billion term loan on Tuesday, had arranged sufficient funding. The company also said that it wasn’t sure on the solidity of Mr. Icahn’s offer, given that he did not produce a signed commitment letter from banks to provide the financing.
“As a result of the lack of evidence that Mr. Icahn has arranged sufficient funding at this time, CIT’s board of directors determined that the best interests of the company and its stakeholders would be served by proceeding with the credit facility provided by a diverse group of lenders,” the company said in a statement.
Shares in CIT were up 10 cents, or 10.41% at $1.06 in ah trading on the New York Stock Exchange.