American financier Carl Icahn, CIT Group Inc.’s largest creditor, has offered the beleaguered lender an alternative option in the form of a $6 billion loan.
In a letter to CIT’s board, Icahn said the loan would save the company $150 million in fees to prospective lenders, and would not force bondholders to vote for a revised debt exchange. Icahn in his letter criticized the proposed $6 billion in a secured term loan being offered by the company as a “bad-faith attempt to buy votes for the company’s exchange offer/plan of reorganization, since all prospective lenders must vote their CIT debt in favor of the company’s plan in order to receive an allocation of the new loan.” He also chastised the proposed prepackaged bankruptcy plan because it would give the board “releases against certain claims that shareholders and bondholders would have against them.”
CIT in response said on Monday that it intends to “ask Mr. Icahn for more information regarding his proposal.”
The lender to small businesses and middle-market companies added that, while it has developed a restructuring plan in consultation with a steering committee of CIT lenders, it “remains open to securing financing on the most beneficial terms.”
Michael A. Gallo Jr., head of the finance group at the law firm DeCotiis, FitzPatrick, Cole & Wisler, noted Icahn’s offer fails to address the restructuring plan.
“The whole purpose of the restructuring is to exchange some of the debt for equity so CIT wouldn’t have to repay it. If you’re trading one loan for another, you’re not accomplishing [any restructuring], just pushing off the [debt] obligation to another time,” Gallo said.
Harold P. Reichwald, co-chair of the banking and specialty finance law practice group at Manatt, Phelps & Phillips, added, “CIT still needs to find a way to finance its ongoing activities, given that it currently cannot access the commercial paper market.”
Separately, CIT said Monday in a Securities and Exchange Commission filing that even with its debt swap in place, it might still file for Chapter 11 protection.
In the regulatory filing, which includes the proposed pre-packaged plan, the lender said only CIT Group Inc. and its Canadian unit, Delaware Funding, would file, leaving the firm’s operating divisions out of the proceedings. CIT also said that it could file a motion asking the court to authorize its continued funding of loan commitments, factoring and other services during its bankruptcy.
The company added that under the prepackaged deal, it expects to emerge from Chapter 11 in two months after such a filing.
Exclusive: @britneyspears is continuing to expand her brand. The pop icon, who appears in @kenzo ’s latest campaign, is partnering with Epic Rights to launch a line of branded merchandise. Read @hernameislex ‘s story, link in bio. #wwdnews #britneyspears
The Duchess of Cambridge channeled Princess Diana’s look upon giving birth to Prince Harry, when she and the Duke of Cambridge departed the hospital with the new baby Prince this afternoon in London. #wwdeye #princeofcambridge
The new Prince of Cambridge has arrived! The Duke and Duchess of Cambridge posed with the 8-pound newborn. She wore a look from one of her go-to designers, @jennypackham. Tap link in bio for more. #wwdeye #princeofcambridge
Jewelry label @alisonlou has made a name for itself with fine jewelry that speaks to the Millennial market. Now @twallz21 reports that the label is bringing those playful ideas to a new affordable line of lucite hoops with the launch of Loucite by Alison Lou. Here’s a look from the line modeled by @emrata. #wwdaccessories
@sarahjessicaparker and @gilt are teaming up on a bridal ready-to-wear line. Tomorrow, Parker will launch SJP by Sarah Jessica Parker Bridal — and as part of the launch, Gilt will offer 15 exclusive styles from the SJP by Sarah Jessica Parker footwear collection that were designed to complement the new line. Made out of 10 styles, the line is designed for a variety of occasions, from bridal showers to receptions. Get more details on WWD.com #wwdfashion
A grooming moment between @tanfrance and @antoni last night at the The LGBT Community Center Trailblazer Awards honoring Anna Wintour, Ricky Martin and more. See more photos at WWD.com #wwdeye (📷: @lexieblacklock)
“It was a very surreal feeling. It wasn’t like we were in the studio together coming up with it — it’s more like he discovered it and loved it. I didn’t let myself get my hopes up, but then it happened it was very exciting,” said singer-songwriter @nombe on discovering that @pharrell would be using his song, “Cant Catch Me” on his HBO documentary series “Outpost.” The German-born singer — named Noah MacBeth — talked to WWD about feminism, using art as a platform for political expression and personal style. Read more on WWD.com #wwdeye (📷: @jilliansollazzo)
This season, denim is going west – in influence. Brands like @fathersdaughterla (pictured here), @tommyhilfiger Jeans, @levis and more are opting for raw, top-stitching styles. (Styled by @thealexbadia; 📷: @ryanplett)