CIT Group (CIT) said it reached a deal with Goldman Sachs (GS) to reduce a $3 billion credit facility by $875 million to $2.13 billion, and keep the line open should CIT file for bankruptcy.
According to Reuters, the 101-year-old commercial lender seeking to avoid collapse, said it is effectively removing the part of the loan it hadn’t taken, according to a filing with the U.S. Securities and Exchange Commission.
CIT paid $285 million as a fee to Goldman for reducing the loan and it has posted an extra $250 million in collateral, according to the filing. In exchange, New York-based Goldman has agreed not to terminate the loan should CIT file for bankruptcy.
Under the terms of the two companies’ original agreement, Goldman Sachs, who provided a $3 billion credit line last year after CIT failed to persuade investors to buy more of its short-term commercial paper, would have been due a $1 billion termination payment to close the credit line after a CIT bankruptcy.
The embattled lender to nearly a million small and midsize businesses has been working non-stop on a plat to cut its bills and avert collapse by asking holders of some $30 billion in bonds to reduce their debt by about $5.7 billion and extend maturities. If the plan fails, the company may go bankrupt.
The clock is ticking for CIT. The company has $800 million of debt due on Nov. 1 and 3, and total liabilities as of mid-June of $64.9 billion.
CIT shares are currently down 12 percent to 83 cents in NYSE trading.