DOW JONES NEWSWIRES
Carl Icahn sent a letter to CIT Group Inc.'s (CIT) board,
offering to underwrite a $6 billion loan that would save the
beleaguered lender $150 million.
Shares jumped 16% premarket to $1.30. The stock is down
three-quarters this year.
Icahn's move comes as the billionaire investor said the company
is "shamelessly" offering to sell bondholders $6 billion of secured
loans "at well below fair market value," said a statement from
Icahn. "The largest holders will be given that right at the expense
of thousands of smaller bondholders who will not be given the same
opportunity."
CIT is on the brink of bankruptcy as late Friday it sweetened
parts of its debt-exchange plan. The company offered scant detail
at the time, and more information is likely to come on Monday when
the company files the amendment with the Securities and Exchange
Commission.
CIT is asking holders of $31 billion in bonds to cut this debt
by at least $5.7 billion and extend the debt maturities.
Bondholders are also voting on a prepackaged bankruptcy plan, which
many see as the likelier outcome.
In a statement, Icahn said CIT's board, "which has reigned over
its ruin," is proposing a reorganization plan that "is designed to
keep the existing regime and its handpicked successors in control"
while also protecting the board from certain claims by stock and
bond holders. Chief Executive Jeffrey Peek recently said he will
leave at year's end.
A CIT spokesman wasn't immediately available to comment.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com