NEW YORK–In a filing with the U.S. Securities and Exchange Commission, CIT said it may need to seek bankruptcy relief if the tender offer it announced for its outstanding floating-rate senior notes, due on Aug. 17, is unsuccessful.
In a statement issued earlier this week, the financial firm announced its offer to buy back these notes with cash in an effort to reduce its liabilities and improve its cash position—and that it had entered into a new $3 billion credit facility provided by a group of its bondholders. In the SEC filing, CIT said if it doesn’t receive enough tenders of the Aug. 17 notes, it may have to ask for bankruptcy court approval for the sale of most or substantially all of its assets, to pursue a plan of reorganization or to seek “another form of bankruptcy relief.”
The tender offer “will increase the company’s capital levels and reduce the amount of its outstanding debt,” the filing said. “If the offer is not successfully completed, the company does not anticipate that it will otherwise be able to make the upcoming August 17, 2009, maturity payment on the August 17 notes or otherwise refinance the August 17 notes prior to their maturity.”
The filing said CIT’s business depends on access to debt capital markets for liquidity and “efficient funding. The disruptions in the credit markets that began in 2007 ... have materially worsened in the first and second quarters of 2009.”