CIT Group amended its exchange offer and reorganization plan on Monday, just over a week after amending the agreement the first time. The New York-based finance company extended the expiration date of one of its offers and increased the interest rate payable on notes.
The CIT Group Funding Co. of Delaware moved the exchange offer expiration date to Nov. 5 from Oct. 29 and increased the interest rate payable on its Series B note to 10.25% from 9%. The terms had been previously amended to increase the rate to 9% from 7% and give preferred stock holders contingent value rights in the plan of reorganization.
The firm also amended the terms of its CIT Group offers and reorganization plan. All new notes issued will now be U.S. dollar-denominated and will be rated by one or more rating agencies. CIT increased the percentage of new common interests distributed to pro rata holders of junior subordinated note claims if certain classes of note holders accept the reorganization plan.
CIT amended terms of the restructuring plan on Oct. 16 to include a cash sweep mechanism to accelerate repayment of new bonds, a shortening of the maturities of new bonds, an increase in the equity offered to subordinated debt holders and the inclusion of notes maturing after 2018, which were not previously considered as part of the exchange.
CIT is seeking to reduce its roughly $30 billion in unsecured debt by at least $5.7 billion. Subordinated debt comprises about $1.89 billion of that amount. The biggest group of CIT bondholders, including firms like Centerbridge Partners and Silver Point Capital, is backing the restructuring plan, as is Little Bear Investments, a representative for an ad hoc committee of investors holding about $400 million of CIT subordinated bonds.
Last week, investor Carl Icahn sent a letter to CIT's board of directors offering the company a $6 billion loan as an alternative to the restructuring proposal, which he described as unconscionable.
A company representative was not immediately available for comment.