CIT Group gets $1 billion credit line

NEW YORK (AP) | Commercial lender CIT Group Inc. said Friday that billionaire investor and bondholder Carl Icahn agreed to support the company’s restructuring plan amid reports CIT may soon file for bankruptcy protection.

Mr. Icahn also agreed to provide CIT with a $1 billion line of credit.

Mr. Icahn has been an outspoken critic in recent weeks of New York-based CIT Group’s plan to restructure its debt in an effort to avoid collapse. CIT, one of the largest lenders to small and midsize businesses, has been trying to reduce its near-term debt burden by $5.7 billion.

“Our ability to secure an incremental $1 billion committed line of credit from Mr. Icahn’s affiliates supports our restructuring plan and helps ensure our ability to continue to serve our existing small-business and middle-market customers,” CIT spokesman Curt Ritter said.

On Wednesday, CIT received a $4.5 billion line of credit from lenders and other bondholders who had already provided it with $3 billion in financing over the summer.

Thursday marked the last day most CIT debtholders could agree to exchange their bonds for new debt that matures later and stock. Results of that exchange have not yet been released.

The company said earlier Friday it was still tabulating the votes.

Even if bondholders approve the debt restructuring plan, the company could still file for bankruptcy protection. At the same time they were asked to agree to swap their debt, bondholders were also asked to approve a prepackaged bankruptcy plan.

The Wall Street Journal, citing unidentified sources, said the exchange offer likely failed and the company would file for bankruptcy protection as soon as Sunday night.

Mr. Ritter declined to comment on the likelihood of a bankruptcy filing.

A prepackaged bankruptcy, which would have the support of major bondholders, would speed up the process of restructuring CIT’s debt and allow it to return to normal operations faster than a traditional bankruptcy filing.

CIT said Mr. Icahn’s $1 billion loan would be available even if it files for bankruptcy.

Shares of CIT dropped 23 cents, or 24.2 percent, to close at 72 cents in Friday trading.