Ailing CIT gets $4.5 bln loan, rejects Icahn offer

Last Updated: Thursday, October 29, 2009 - 10:03

Washington: US lender CIT Group said Wednesday it had received an additional 4.5 billion dollar loan as it tries to avoid bankruptcy, dismissing billionaire investor Carl Icahn`s last-minute loan offer.

Icahn, who has made a name for himself as a corporate raider, offered on Tuesday to provide CIT a new 4.5 billion dollar term loan after criticizing the company management as ineffective.

But the company doubted his funding plan, citing "lack of evidence that Mr. Icahn has arranged sufficient funding at this time."
Defending the company`s action, Jeffrey Peek, CIT chairman and chief executive, said: "We believe this secured financing will serve the best interests of all stakeholders and will allow us to better position CIT for the future.

"This expanded credit facility will allow us to continue to serve our existing small business and middle market customers as we advance our restructuring plan," he said.

The lender said the new 4.5 billion loan was being provided by a diverse group of lenders, including many of the company?s bondholders.

Icahn had earlier accused CIT of favoring large bondholders "at the expense of thousands of smaller bondholders."
CIT was rescued from almost-certain bankruptcy by some of its largest bondholders in July in the 3.0 billion dollar emergency agreement after the US government rejected the company`s plea for a fresh bailout.

The company warned earlier this month it might file for bankruptcy if it failed to launch a comprehensive debt-exchange plan to beef up capital levels.

CIT, which ran into financial problems after a home mortgage meltdown plunged the country into its worst crisis in decades, reportedly has about 40 billion dollars of long-term debt.

Bureau Report

First Published: Thursday, October 29, 2009 - 10:03

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