After criticizing finance company CIT’s reorganization as an attempt to purchase votes, Carl Icahn is offering $6bn of his own money as a replacement loan. Bloomberg has more:
Investor Carl Icahn offered to provide a $6 billion loan to CIT Group Inc., saying the terms of the 101-year-old commercial lender’s plan to raise the same amount from bondholders penalizes investors.
Icahn said his plan would save the company as much as $150 million in fees, providing a better alternative than “shamelessly offering certain large unsecured bondholders the opportunity to purchase $6 billion in secured loans in the company at well below fair market value.”
CIT is seeking to reduce debt by at least $5.7 billion after being locked out of the unsecured debt markets it relies on for funding and posting nine quarters of losses totaling more than $5 billion. At the same time CIT pursues the out-of-court debt swap, it’s also asking bondholders to vote on a prepackaged bankruptcy plan.
Icahn is CIT’s biggest creditor.
Incidentally, Icahn’s firm is also currently entangled with Goldman Sachs. GS is suing Icahn’s company for shorting Delphi’s bank debt, then not paying up after the market price of Delphi’s bank debt subsequently increased. Forbes has that story.