CIT talks with the bondholder group for a $2-$3 billion financing have resulted in a deal.
According to the WSJ, CIT Group Inc. (NYSE:CIT) has reached a $3 billion rescue-financing agreement with key bondholders that will allow the 101-year-old lender to avoid bankruptcy.
The main goal of the rescue is to allow CIT, which suffered a liquidity crunch and found itself straining under its multi-billion dollar debt load ($40 billion of long-term debt to be exact), to restructure outside of bankruptcy court.
CIT was in talks with bondholders most of the weekend, advised by investment bank Houlihan Lokey, as it tried to hammer out a rescue financing deal before markets opened.
CIT lends to nearly one million small and mid-sized businesses. The impact from a potential CIT collapse could be widespread and worsen the effects of the economic downturn for some firms. In an early sign, Birmingham, Alabama-based hardware distributor, Moore-Handley Inc. (OTC:MHCO), became the first company to blame the troubles of CIT for its bankruptcy. The supplier said in court papers file Friday (July 17) that it was forced into Chapter 11 because it had trouble getting cash from CIT, its lender.