Report: CIT Group Cuts Deal With Bondholders, Staves Off Bankruptcy
The Wall Street Journal is
reporting
that CIT Group has cut a last minute deal with key bondholders for $3 billion in financing. The financing reprieve will allow CIT to avoid bankruptcy and restructure its business outside of bankruptcy court.
CIT Group is the nation's largest factor. It provides crucial financing for vendors, small to medium sized retailers and designers. After the government denied CIT Group's request for bailout funds, a wave of panic swept the fashion industry at the prospect of CIT Group going out of business. The deal with the bondholders will allow CIT Group to continue to operate and allow its many vendors to access their lines of credit which are needed to get fashion items into the stores for the fall season.
Update: After reporting that the deal was done, The Wall Street Journal is now backing off those claims a bit, saying that the deal was presented to bondholders this evening, but that it still must be approved by financial and legal advisors. The other sticking point is that the interest rate CIT is being charged is ten percentage points over the current London interbank offered rate (LIBOR) and that the negotiations could still break down at the last minute. Vendors, manufacturers and retailers are collectively holding their breath, hoping that the deal goes through.
