Bond giant PIMCO, one of six members of a steering committee of CIT’s largest bondholders that put in place $3 billion of financing for the struggling lender at the end of July, has sold its position, a source familiar with the matter told Dow Jones on Wednesday.
PIMCO, Centerbridge Partners LP, Oaktree Capital Mngmt, Baupost Group, Capital Research & Mngmt Co and Silver Point Capital were part of a group that provided the multi-billion dollar loan to New York commercial lender CIT Group (NYSE:CIT) this summer after regulators declined to give a second bailout to the firm. According to the DJ’s report, a provision in the loan agreement requires members of the steering committee to hold a certain amount the debt. The amount of the position PIMCO sold triggered that provision and forced it off the committee.
This new twist in the CIT saga — which launched a debt-exchange plan on Oct. 1, aiming to cut its debt by at least $5.7 billion and to extend debt maturities — comes as the struggling lender tries to end months of uncertainty about its future. It is unclear how this new development will impact the result of the co.’s restructuring plan.
DJ said PIMCO couldn’t immediately be reached for comment, while CIT spokesman Tim Lynch declined to comment on the membership of the steering committee.