CIT reaches $3 bln deal with bondholders - WSJ

[CHIMO]

NEW YORK, July 19 (Reuters) - CIT Group Inc has cut a deal with its key bondholders for $3 billion in financing that will allow the 101-year-old lender to avoid bankruptcy, according to a headline on the Wall Street Journal's web site.
CIT, which suffered a liquidity crunch and found itself straining under its multi-billion dollar debt load, aims to restructure outside of court, the Journal said.
No other details were immediately available.
CIT has been in talks with the bondholder group to hammer out the rescue financing deal, Reuters reported on Saturday, citing a source close to the situation.
CIT lends to nearly one million small and mid-sized businesses. Its problems surfaced two years ago in the wake of Chief Executive Jeffrey Peek's decision earlier in the decade to expand into subprime mortgages and student loans, both potentially highly profitable but fraught with added risk.
CIT gained the status of bank holding company in December so it could draw $2.33 billion of taxpayer money from the Treasury's Troubled Asset Relief Program. But last-ditch rescue talks with the U.S. government failed last week as the Obama administration declined help, saying it had set high standards for granting aid to companies and leaving private investors as the one alternative to avoid collapse.
http://www.guardian.co.uk/business/feedarticle/8615703

[tabatha]

1. So, Obama was right not to give them a handout.

[Yupster]

2. That's good news indeed

I know some CIT bondholders, and they're mostly the same people who had their GM bonds stolen from them.

Losing the CIT bonds too would be quite a shot to tens of thousands of people, mostly elderly people. I think most bondholders would accept skipping a dividend payment or three rather than force a bankruptcy.