CIT Group amends exchange offers, extends deadline of some to Nov. 5

By Angela McDaniels

Tacoma, Wash., Oct. 26 - CIT Group Inc. amended the exchange offers it began Oct. 1 for $30.2 billion of outstanding notes, according to an 8-K filing with the Securities and Exchange Commission.

The offers for notes issued by CIT Group Funding Co. of Delaware LLC were extended to 11:59 p.m. ET on Nov. 5 from Oct. 29, and the coupon on the series B notes to be issued under these offers was increased to 10¼% from 9%.

The company also amended the exchange offers being held for CIT's notes to:

• Specify that all new notes issued in the offers or in connection with the plan of reorganization will be denominated in dollars;

• Increase the amount of "permitted debt" under the indentures of the new notes to a maximum of $9.625 billion from $9.5 billion;

• Add a clause that the board of directors may designate any restricted subsidiary (other than CIT Funding and CIT Financial Ltd.) to be an unrestricted subsidiary if that designation would not cause a default;

• Restrict the ability of the company and its subsidiaries to amend their intercompany notes and support agreements without the consent of the holders of a majority of the series B notes; and

• Specify the treatment of old notes issued with a survivor's option for which that option has been exercised but not yet paid. Any of these notes that are tendered will be redeemed under the terms of the survivor's option if the exchange offers are not successful. Otherwise, they will be exchanged like the other notes.

Exchange offers

As previously reported, the company is also soliciting votes for a voluntary pre-packaged plan of reorganization, which it plans to pursue if the exchange offers are unsuccessful.

Holders who tender under the exchange offers will receive a share of each of five series of newly issued secured notes and/or shares of newly issued voting preferred stock.

According to a prior filing with the Securities and Exchange Commission:

• Holders of CIT notes maturing in 2009 will receive $900 in new notes and 0.35108 of a new preferred for each $1,000 of old notes;

• Holders of CIT notes maturing in 2010 will receive $850 in new notes and 1.05323 new preferreds;

• Holders of CIT notes maturing in 2011, 2012 and 2067 will receive $800 in new notes and 1.75539 new preferreds;

• Holders of CIT notes maturing in 2013 through 2017 and in 2021, 2022 and 2036 will receive $700 in new notes and 2.80862 new preferreds;

• Holders of CIT notes maturing in 2018 will receive 7.54816 new preferreds; and

• Holders of Delaware Funding notes will receive $1,000 in new notes.

The companies will also pay accrued interest.

Holders of CIT notes will receive 7% series A notes issued by CIT, and holders of Delaware Funding notes will receive 10¼% series B notes issued by Delaware Funding.

The principal amount of new notes issued will consist of 10% of notes due 2013, 15% of notes due 2014, 15% of notes due 2015, 25% of notes due 2016 and 35% of notes due 2017.

The new preferreds will have a liquidation preference of $1,400 each.

The exchange offers are conditioned on achieving acceptable liquidity and leverage. These conditions require that the exchange offers cannot be completed unless the amount of tenders received combined with the company's other efforts are enough to reduce its total debt by at least $5.7 billion, with specific debt reduction targets for the periods from 2009 to 2012.

The exchange offers and pre-packaged plan solicitation expire at 11:59 p.m. ET on Oct. 29 for CIT notes except for the notes maturing after 2018, for which there is an early acceptance date of Oct. 29 and an expiration date of 11:59 p.m. ET on Nov. 13.

If the offers are successfully completed, the company will seek to reclassify its outstanding preferred stock, including the new preferreds, into common stock.

If all bondholders participate in the exchange offers, they will hold 91.1% of the equity and voting power of the company.

As previously reported, the company amended the plan on Oct. 19 to:

• Add a cash sweep mechanism to accelerate the repayment of the new notes to be issued in the exchange offers;

• Shorten the maturities of the new notes by six months;

• Shorten by six months the maturities of the junior credit facilities being offered to lenders in exchange for the company's revolving credit agreements and terms loans;

• Increase the amount of equity offered to subordinated debtholders reflecting agreements with holders of the majority of CIT's senior and subordinated debt;

• Include the notes maturing after 2018 that had previously been excluded from the exchange offer and consent solicitation;

• Increase the coupon on the series B notes being issued by CIT Group Funding Co. of Delaware LLC to 9% from 7%; and

• Provide preferred stock holders contingent value rights in the plan of reorganization, and modify the allocation of common stock in the recapitalization after the exchange offers, as part of an agreement with the Department of Treasury.

CIT is a New York-based lender to small businesses and middle-market companies.

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