CIT Group has amended the terms of its tender offer for $1 billion of notes maturing on Aug. 17.
The amendment lowered the minimum threshold required to complete the tender offer to 58% from 90%. And as a result, the firm said it had enough votes to go through with the offer. The tender offer was set to expire on Aug. 14.
CIT also suspended dividend payments on four series of preferred stock to “improve liquidity and preserve capital” during its ongoing restructuring efforts, the company said in a statement.
It was imperative that the firm received the support it needed from bondholders because if it didn’t, the firm would have breached the terms of a $3 billion loan facility it received from bondholders last month. And if that happened, CIT may have had no other choice but to file for bankruptcy.
CIT has been burdened with debt and eroding liquidity. The firm has more than $10 billion in debt coming due next year and has reported losses totaling more than $3 billion in the past eight quarters. It has been reported that the firm may need as much as $6 billion to avoid filing for bankruptcy protection.
In July, the government denied CIT’s request to access to the Temporary Liquidity Guarantee Program, which would have flushed CIT with fresh capital. CIT received approximately $2.3 billion from the government in December, when it became a bank holding company.