CIT sweetens, extends debt exchange offer

NEW YORK (Reuters) - CIT Group Inc CIT.N has extended and sweetened its debt exchange offer to some of its bondholders, the lender said in a regulatory filing on Monday.

Flags fly at the CIT offices in New York, September 30, 2009. REUTERS/Brendan McDermid

The extension applies to investors holding debt that funded CIT business in Canada, who are entitled to recover money from both Canadian assets and the parent company in the United States.

In the new offer, CIT raised the interest rate payable on its $2.15 billion series B notes to 10.25 percent a year from 9 percent, and extended the closing date of the exchange offer to November 5 from October 29.

The changes were made on Friday, according to the filing.

The company said in the filing that it was in discussions to boost a $3 billion secured credit facility by an additional $4.5 billion and alter a senior credit facility.

CIT shares were down 6 percent to $1.07 in afternoon trading.

New York-based CIT is trying to restructure its debt by getting debtholders to exchange their notes or to agree to a prepackaged bankruptcy.

The company warned bond holders last week that without the debt exchange or an orderly bankruptcy, it would have to liquidate, which would be an expensive process.

Billionaire investor Carl Icahn, who has bought up CIT debt in the past few months, has criticized the restructuring plans. Icahn said last week he has offered to underwrite a $6 billion loan to CIT.

CIT lends to close to 1 million companies, making it a source of hard-to-find credit in the wake of the financial crisis. If it were to file for bankruptcy, it would be one of the five largest ever in the U.S., based on reported assets.

Earlier this month the group of Canadian noteholders asked a federal judge to annul a claim on CIT assets by Barclays Bank and other lenders, saying CIT knew it would become insolvent as a result of a rescue loan from those lenders.

Reporting by Elinor Comlay; Editing by Lisa Von Ahn and John Wallace