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This was my mistake -- I missed the word "NOT" here:
Meeting of Creditors: If the Modified Plan of Reorganization is not confirmed on December 8, 2009, the meeting of creditors pursuant to section 341 of the Bankruptcy Code (the "Meeting of Creditors") will be continued on January 12, 2010 at 2:00 p.m. (prevailing Eastern Time).
Office of the United States Trustee, Region 2
80 Broad Street, 4th Floor
New York, NY 10004
Rule 9001(5) of the Federal Rules of Bankruptcy Procedure requires that a representative of the Debtors appear at the Meeting of Creditors for the purpose of being examined under oath by a representative of the Office of the United States Trustee and by any interested parties that attend the meeting. Creditors are welcome, but not required, to attend the meeting. The Meeting of Creditors may be continued or adjourned by notice at the meeting, without further written notice to creditors.
My mistake - the hearing started before lunch. I thought it was after lunch.
Disclosure Statement and Confirmation Hearing: Please take notice that a hearing will be held on December 8, 2009 at 11:00 a.m. (prevailing Eastern Time) before the Honorable Allan L. Gropper, United States Bankruptcy Judge for the Southern District of New York, Room 617, 6th Floor, One Bowling Green, New York, NY 10004, to consider the adequacy of the Disclosure Statement and confirmation of the Plan. Please see below for relevant links regarding CIT Group Inc., et al.'s Plan of Reorganization:
http://www.kccllc.net/citgroup
The smart money is in the know here. ~IMO
court's not even in session yet
Quite the opposite, it would appear.
didn't tank - all the other shares -- common and preferred - tanked on news coverage of the BK proceedings.
Nice find Generic!
CIT Group bankruptcy and CIT-PZ
category: Investment Ideas
tags: Bankruptcy, CIT Group, CIT-PZ, Leverage
11.16.2009 6:37 pm
CIT Group Bankruptcy Overview On Nov 02, CIT Group and CIT Group Funding Company of Delaware LLC filed for chapter 11 Bankruptcy protection under the pre-packaged plan of reorganization. The conditions for the debt exchange offer were not met. CIT Bank was not part of the filing and will continue to operate regularly. Court proceedings should not take long and CIT Group is expected to emerge from bankruptcy by the end of the year or early next year. The firm is now trading under CITGQ.PK. I am skeptical about CIT Group’s ability to return to profitability even if the company is reducing its debt level and postponing maturities, since leverage remains elevated. In 2006, the company’s leverage was 12x operating earnings (EBITDA), in 2007 and 2008 it was 15x. Assuming operating earnings remain constant post re-org in 2010 at 4,260 mm; the company will be leveraged 9x, which it is still a high number. The credit rating that will be assigned after the company emerges from bankruptcy and the evolving of ongoing regulatory issues, the “cease and desist order” imposed by FDIC on CIT Bank, will be a key factor for the firm’s capacity to raise short term funds.
CIT Preferred Class Z While I was looking up and down the capital structure, I found out that a mandatory convertible preferred stock, CITEQ which was formally CIT-PZ, trades around $16, surprising for a preferred stock. The interesting part is that the security is actually benefiting from bankruptcy filing. Let’s take a closer look at it.
Corporate Units On October 17 2007, CIT Group issued 24,000 m of mandatory convertible preferred shares called “Corporate Units”. Each unit represents a 1/40 or 2.5% ownership interest in $1,000 principal amount senior note maturing on November 15, 2015 issued by CIT Group and is composed of a purchase contract which obligates the holder to purchase, no later than November 17, 2010, for a price of $25 in cash, a certain number of common shares.
Treasury Units Holders of a Corporate Units have the right to substitute, anytime before November 1st 2010 in integral multiples of 40, for Treasury Units which consist of an ownership interest in a $1,000 principal zero-coupon U.S. Treasury security (CUSIP No. 912820MJ3) maturing November 15, 2010. Each Treasury Unit is composed of a purchase contract which obligates you to purchase common shares under the same terms of a Corporate Unit Holder. More specifically, when the treasury security matures on Nov 15 2010, the proceeds are used to purchase common shares on Nov 17 2010.
Bankruptcy Clause The offering states that in the event of Bankruptcy, the obligation under the purchase agreement is terminated. You are no longer obligated to purchase common shares on Nov 17 2010, which could cause a huge loss at the current price, and can no longer create Treasury Units from Corporate Units either, because that was contingent to satisfying your obligation under the purchase contract.
Conclusion CIT-PZ is trading at $16, slightly below what holders are expected to receive from Bankruptcy, which is 70 cents on the dollar plus some unspecified equity interest like. If you are looking to buy senior unsecured bonds and participate in the restructuring, you should buy CIT-PZ because it has the same recovery rate as a Class 9 Senior Unsecured bond but it offers higher liquidity and better price.
Related posts on this Blog:
CIT Debt Exchange Set to Fail
http://www.notananalyst.com/2009/12/07/unlocking-general-growth-properties-equity-value/
CITEQ continues to rise - these preferreds seem to be favored
Posted by Generic on another board:
CIT, Filing Statistics, Crusader, Charter: Bankruptcy (Update1)
By Bill Rochelle
Nov. 3 (Bloomberg) -- The prepackaged Chapter 11 filing by CIT Group Inc. left non-bankrupt subsidiaries at risk of being called in default on their own obligations. To prevent an erosion in value and allow subsidiaries to remain outside bankruptcy, CIT is calling on the bankruptcy judge to stop some creditor actions against a leasing subsidiary as though the subsidiary too was in bankruptcy reorganization.
CIT’s efforts won’t go unopposed.
In papers filed soon after the Chapter 11 petition on Nov. 1, CIT sought a temporary restraining order against parties to some railcar leasing transactions of non-bankrupt subsidiary CIT Group/Equipment Financing Inc.
CIT says there are 41 transactions where other parties to the complicated leases could declare a default against the subsidiary. CIT says the actions “would likely destroy the going-concern value of the railcars,” bringing on “the needless loss of up to approximately $680 million of value” in the railcar business.
The parent’s bankruptcy filing was an event of default, theoretically allowing other parties to the leases to take control of the railcars and demand direct payment from the operators of the equipment. Some of the parties also could demand payment of so-called stipulated loss value under the leases, including the value of the equipment and other damages, such as adverse tax consequences.
Some defendants in the suit filed papers yesterday objecting to the scope of the injunction CIT seeks. John Hancock Life Insurance Co., Northwestern Mutual Life Insurance Co., and Teachers Insurance & Annuity Association of American called on the bankruptcy judge to insure CIT will pay stipulated loss value for the equipment in December despite an injunction. They also want aircraft to be excluded specifically from the proposed injunction.
Other defendants in the suit include affiliates of Siemens AG, Fifth Third Bancorp, and Wells Fargo & Co. The lawsuit will test whether the bankruptcy judge can or will grant the subsidiary the same relief it would enjoy were it too in Chapter 11.
New York-based CIT, the sixth-largest commercial and industrial lender in the U.S., is also the third-largest in the leasing of railcars and aircraft. It listed assets of $71 billion and debt totaling $64.9 billion in the petition.
The reorganization plan, already accepted by all affected creditor classes, is to reduce debt by $10 billion. The plan provides full payment for some structurally senior noteholders while senior unsecured creditors are projected to have a 94.4 percent recovery from new notes, equaling 70 percent of their existing holding, plus common equity.
Subordinated debt holders are predicted to have a 50 percent recovery by receiving new common equity and contingent value rights.
Junior subordinated creditors are expected to see an 8.1 percent dividend through new equity and contingent value rights. Existing common shareholders receive nothing, while holders of existing preferred equity are to be given contingent value rights.
The case is In re CIT Group Inc., 09-16565, U.S. Bankruptcy Court, Southern District New York (Manhattan).
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7Gm8cp8MzP8#
13:10 CITEQ CIT Group Inc (DEL) Equity Units 11/3/2009 Y 100 From NYSE (CI $Z)
13:10 CITGQ CIT Group Inc (DEL) Common Stock 11/3/2009 Y 100 From NYSE (CIT)
13:10 CITBQ CIT Group Inc (DEL) Preferred Series A 11/3/2009 Y 100 From NYSE (CI $A)
13:10 CITDQ CIT Group Inc (DEL) Non Cumulative Perp Pfd Conv Ser C 11/3/2009 Y 100 From NYSE (CI $C)
http://www.otcbb.com/asp/dailylist_detail.asp?d=11/02/2009&mkt_ctg=NON-OTCBB
CIT Board of Directors Approves Proceeding with Prepackaged Plan of Reorganization...
http://www.businesswire.com/portal/site/home/email/alert/?ndmViewId=news_view&newsLang=en&newsId=20091101005053
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CIT Group Inc. operates as the holding company for CIT bank that provides commercial financing and leasing products, and management advisory services to the small and middle market companies worldwide. Its products principally include asset based loans; secured lines of credit; operating, capital, and leveraged leases; vendor finance programs; import and export financing; debtor-in-possession/turnaround financing; acquisition and expansion financing; letters of credit/trade acceptances structuring; and small business loans. The company's services primarily comprise financial risk management; asset management and servicing; merger and acquisition advisory services; debt restructuring; credit protection; accounts receivable collection; debt underwriting and syndication; capital markets; and insurance services for small businesses and middle market customers. It serves clients in various industries, including transportation, particularly aerospace and rail, manufacturing, wholesaling, retailing, health-care, communications, media and entertainment, and various service-related industries. The company was founded in 1908 and is headquartered in New York, New York.
CIT files for Chapter 11 bankruptcy protection
CIT Group seeks prepackaged reorganization in New York bankruptcy court,
* By Stephen Manning, AP Business Writer
* On 9:28 pm EST, Sunday November 1, 2009
http://finance.yahoo.com/news/CIT-files-for-Chapter-11-apf-1202955938.html?x=0&.v=7
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 17, 2007)
www.sec.gov/Archives/edgar/data/1171825/000093041307008058/c50431_424b2.htm
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