|Carl Icahn is trying to block CIT’s plan to restructure.|
NEW YORK - Billionaire investor Carl Icahn offered yesterday to buy certain classes of debt from CIT Group bondholders as he tries to thwart a restructuring plan by the commercial lender.
Icahn said in a letter he will pay those bondholders 60 cents on the dollar for their bonds if they agree to reject CIT’s debt restructuring plan.
New York-based CIT, one of the nation’s largest lenders to small and midsize businesses, is trying to get bondholders to swap existing debt for new debt that matures later and stock. CIT is trying to reduce its near-term debt maturities by $5.7 billion.
On Monday, CIT sweetened its exchange offer for a second time in two weeks in an apparent sign debtholders are balking at the program.
Icahn said CIT’s restructuring plan is unfair to small bondholders.
He is offering to buy CIT’s classes of fixed-rate notes whose principal totals less than $100 million.
A spokesman for CIT Group declined to comment.
CIT is likely to file for bankruptcy protection if it is unable to win acceptance for the restructuring plan, which would reduce its near-term debt maturities by about $5.7 billion. Even if it can complete the restructuring, it has warned it still might have to reorganize under bankruptcy protection.
While CIT is asking bondholders to swap their debt, it is also seeking their approval for a prepackaged bankruptcy plan that might be needed even if the debt exchange is successful.
Icahn’s offer would go into effect only if CIT’s debt exchange offer, which expires tomorrow, fails.