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CIT to develop out-of-court restructuring plan, including debt-for-equity swap, maturity extensions
By Caroline Salls
Pittsburgh, Aug. 17 - CIT Group Inc. expects to develop and begin executing an out-of-court restructuring plan by Oct. 1, according to a 10-Q filed with the Securities and Exchange Commission.
CIT said the plan will identify a series of transactions, which will likely include debt-for-equity exchanges and maturity extension offers.
Although it plans to complete the restructuring outside of bankruptcy, CIT said it could be forced to file bankruptcy to develop a plan of reorganization or seek court approval of a sale of its assets if the proposed restructuring is unsuccessful or its lender steering committee is unwilling to accept an out-of-court restructuring.
According to the 10-Q, CIT's management will develop a business model that optimizes its portfolio, organization structure and funding model. In addition, the business model could identify businesses or portfolios that may be liquidated or sold over time.
The company said the plan will identify a target capital structure that would provide a cushion against risk, meet and exceed all regulatory capital requirements and position the company for a return to investment-grade ratings.
CIT said its management continues to believe that a bank model is a key element of a small-business focused commercial franchise.
As a result, the plan will detail the core businesses that will operate in CIT Bank, possibly including a plan to reintroduce to regulators the transfer of business platforms into the bank.
The company said deposits, including retail deposits, are likely to be a key component to its funding model.
CIT is a New York-based lender to small businesses and middle market companies.
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