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UPDATE 1-CIT nears securing $3 bln to $6.5 bln loan -sources
Wed Oct 14, 2009 4:15pm EDT
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* CIT could finalize terms as soon as this week -sources
* Facility mostly to repay debt -sources
* CIT shares up 15.2 pct (Adds details, background, byline, share price)
By Paritosh Bansal
NEW YORK, Oct 14 (Reuters) - CIT Group Inc (CIT.N) is getting closer to finalizing the terms of a new loan that would give the struggling commercial lender an additional $3 billion to $6.5 billion, two sources familiar with the matter said on Wednesday.
The loan, being arranged by Bank of America, could be finalized as soon as this week, the sources said, declining to be identified because talks are private. One of the sources warned that the situation was still fluid and it could be delayed.
CIT would use most of the additional money, except about $500 million, to repay existing debt, the sources said.
The lender to small and medium-sized businesses said earlier this month it was looking for investors to approve a large debt exchange that would reduce its borrowings, or to approve a prepackaged bankruptcy.
The company's debt exchange aims to reduce CIT's borrowings by at least $5.7 billion, with specific targets for lowering the company's liabilities through 2012. The exchange offer expires on Oct. 29.
The loan would work as a secured facility in case of a successful exchange offer by the lender, or a debtor-in-possession loan if CIT has to file for bankruptcy, one source said.
"They have got people who are willing to step up for large commitments," the second source said. "It's mostly the people who were in the first deal."
The company got an emergency $3 billion loan from a group of its bondholders in July.
CIT has roughly 1 million customers and more than $70 billion of assets, but many of its borrowers are struggling amid the worst recession since the Great Depression.
CIT spokesman Curt Ritter declined to comment.
CIT's shares closed up 14 cents, or 15.2 percent, at $1.06 during late trading on the New York Stock Exchange. (Reporting by Paritosh Bansal; editing by Carol Bishopric) (For more M&A news and our DealZone blog, go to www.reuters.com/deals)
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