CIT Urges Plan Approval to Avoid Losses
October 24, 2009 by Stephen Kersey
Filed under Business
The CIT Group, which is the middle-market lender that has struggled under the weight of the financial crisis, has unveiled a management-sponsored restructuring plan and has strongly urged investors to get behind the plan. In fact, CIT has told its investors that passing the plan is the only way to avoid losses of 63 to 94 cents for every $1 invested.
Image: CIT Group
According to its restructuring presentation, CIT will have to resort to bankruptcy unless this specific plan is not passed, a situation that would involve great losses for the CIT investor and sacrifice control of the changes. The plan would involve an exchange offer and the acceptance of a prepackaged reorganization.
However, billionaire investor Carl Icahn has continued to urge bondholders to reject the plan, instead following his own proposal, which would take a $6 billion loan and gradually wind down operations. By running down CIT’s assets, Icahn states, the value of investors’ bonds would only decrease by 15 to 20 percent, at the most.
