CIT delays 2Q report and warns on bankruptcy possibility again

August 11, 2009 by · Leave a Comment
Filed under: Stock Market News 

This does not bode will for CIT.  With this delay and a reiterated warning on possible bankruptcy, CIT is really shaking investor confidence and that could be the final nail in the coffin for CIT.  Bankruptcy could be the best option for CIT so they can deal with their $65 billion in debt obligations, they will need to address this with their bondholders and work out an equitable deal for both parties.

News (CNN):

Shares of CIT Group Inc sank 20 percent Tuesday after the troubled lender delayed filing its second-quarter report with regulators and again warned it may have to file for bankruptcy.

CIT, which has been battling to restructure its debt, said in a filing with the U.S. Securities and Exchange Commission that management is focused on restructuring the company to avoid bankruptcy and it was unable to file its quarterly report by the deadline on Monday.

The 101-year-old lender, which last month secured $3 billion in emergency funding from bondholders, has launched a tender offer for $1 billion of floating-rate notes due Aug. 17.

In the filing on Tuesday, it warned that if the tender offer is not successful and if the company is unable to secure alternative financing, it may be forced into bankruptcy.

New York-based CIT last week said it had met the conditions for the offer, after it passed the 58 percent mark for the minimum tender.

CIT plans to use the proceeds from its emergency funding to complete the tender offer and make the payment on the Aug. 17 notes, according to the filing on Tuesday.

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