Friday, October 30, 2009

CIT Group (CIT) Falls As Bankruptcy Filing Seems Likely

CIT Group, Inc. (NYSE: CIT) is trading 17 percent lower in early action as a bankruptcy filing is seen likely for the small and mid-size business lender.

The company has been exploring a voluntary debt exchange and a prepackaged bankruptcy with bondholders. The voluntary debt exchange is unlikely to happen, leaving bankruptcy as the likely option.

This morning, CIT has reached an agreement to amend its $3 billion securities-based financing facility with Goldman Sachs International. Pursuant to the amendment, the commitment amount of the GSI Facility has been reduced to $2.125 billion, effectively eliminating the currently unused portion of the facility, and CFL has agreed to post additional collateral to secure amounts due to GSI under the GSI Facility

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