CIT files for prepackaged bankruptcy

CIT Group and CIT Group Funding filed for a pre-packaged, chapter 11 bankruptcy on Sunday at the US bankruptcy court for the southern district of New York. The company listed a total of $54.1 billion in outstanding debt.

Holders of 85% of the eligible debt, and almost 90% of participants agreed to the prepackaged filing, as the exchange offer failed to go through. The exchange offer for bonds and loans was launched on 1 October, and its success was conditional upon CIT meeting certain liquidity and leverage conditions.

Under the reorganisation plan, CIT’s noteholders will get new notes and equity which, according to CreditSights, should be worth around 70 cents in the dollar.

CIT has been able to obtain a $1 billion debtor-in-possession loan from investor Carl Icahn and a $2.1 billion securities-based financing facility from Goldman Sachs, for which CIT paid $285 million.

CIT’s $54.1 billion of total outstanding debt includes a $3 billion senior secured term loan facility from Barclays, $3.1 billion of a two-tranche revolver from Citi, approximately JPY21 billion ($230 million) of term loans with Mizuho, and $750 million of uncollateralised standby letter of credit facility extended by 27 banks with JP Morgan as lead bank. Other secured borrowings also include a total return swap with Goldman Sachs with a maximum notional amount available of $3 billion. The largest unsecured creditor is Bank of America for a $7.5 billion expansion term facility, followed by Bank of New York Mellon with over $3.1 billion in retail bonds, and holders of the Canadian senior unsecured notes with $2.1 billion.