DOW JONES NEWSWIRES
Billionaire investor Carl Icahn announced a tender offer for CIT
Group Inc.'s (CIT) smaller bondholders, which he said have been
"disadvantaged by the restructuring process and completely ignored"
by the ailing commercial lender.
Icahn said he would provide the protection if the bondholders
were willing to support him in his opposition to the company's
prepackaged bankruptcy plan.
CIT is facing a Thursday deadline for some of its bondholders to
vote on either a $31 billion debt exchange or a plan to file for a
prepackaged bankruptcy. Under the bankruptcy plan, CIT would seek
Chapter 11 protection with support from enough creditors to quickly
get a reorganization plan approved, and emerge from bankruptcy in
one or two months.
Icahn said he believes the plan will devalue the company--and
allow the current boards to retain control of the company. It has
been speculated Icahn would be the largest shareholder in a
reorganized CIT if the lender's proposed restructuring plan goes
through.
Icahn's offer is a 30-day tender offer at 60% of face value. To
qualify for Icahn's offer, bondholders will have to choose not to
participate in CIT's exchange offer and most vote to reject the
prepackaged plan by the Thursday deadline.
Last week, Icahn offered to underwrite a $6 billion loan to CIT,
complaining that a proposed solution hammered out by the company
and its largest creditors is too expensive and detrimental to CIT's
small bondholders.
CIT's shares were inactive in premarket trading, at $1.07. The
stock is down 76% this year, and far under the all-time high of
over $60 in 2007.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com