The Associated Press reports that CIT Group Inc., a major lender to small and midsize businesses that struggled under mounting losses and tight credit availability, amended its debt restructuring offer to enlist more bondholder support for the plan.
The troubled New York-based lender had launched the debt restructuring effort Oct. 1 with the hope that it will trim at least $5.7 billion from its near-term debt. It is also asking bondholders to approve a prepackaged reorganization plan in case it is forced to file for Chapter 11 bankruptcy protection.
The company said in a statement late Friday that the debt exchange changes have the backing of its board and a steering committee of a bondholders.
CIT Group’s losses have been mounting as its borrowing costs have outstripped its income amid the credit crunch. It has received $2.3 billion in federal bailout money.
Its customers range from Dunkin’ Donuts franchisees to department store operator Dillards Inc. It is also a short-term financier to about 2,000 vendors that supply merchandise to 300,000 stores, according to the National Retail Federation.
Some economists say the company’s collapse could hurt a U.S. economy struggling to recover from recession.
CIT Group said the amended debt exchange terms include a mechanism to accelerate repayment of new notes and the shortening of maturities by six months for all new notes and junior credit facilities.
CIT had $54.09 billion in outstanding long-term borrowings as of June 30, including $13.85 billion due by June 30, 2010.
“Over the last two weeks, we have continued to work constructively with the steering committee and believe that these amendments will further build bondholder support for our restructuring plan,” CIT Group Chairman and CEO Jeffrey Peek said in the statement.
He said the company “will reduce the uncertainty around or business” through either completing the debt exchange offers or an expedited in-court restructuring process.
On Tuesday, the company announced that Peek, 62, will resign at the end of the year. He has been with CIT Group since 2003.