In its on-going efforts to reduce debt and come out of bankruptcy, money lender CIT Group, Inc. (CITGQ.PK), Thursday said that a majority of its debt-holders supported its voluntary prepackaged re-organization efforts, following its solicitation of votes towards the plan.
About 83% of the company's eligible debt participated in the solicitation, of which 88% votes or 92% in principal amount were in-favor. The total solicitation was thus favored by all classes of debt entitled to vote, supporting the plan in substantial excess number of positive votes, according to the New York, Manhattan-based company.
Debt-holders who recently voted on the reorganization plan included Class 7 Canadian Senior Unsecured Notes which expired on November 5, 2009 and Class 8 Senior Unsecured Notes maturing after 2018, expired on November 13, 2009.
Out of 89% of Class 7 holders (by principal) who participated in the voting, nearly 92% votes, reflecting 100% in principal amount, supported the Plan.
While, out of the 74% of Class 8 holders (by principal) who voted, 93% votes or 96% of principal amount favored the re-organization. However, the company also said that, it is giving holders of the Class 8 notes who did not vote to accept the plan, with the opportunity to receive new notes and common stock on the same terms as those who voted favorably, through an election.
Back in October 1, the company requested bondholders and other holders of debt to approve a prepackaged plan of reorganization so that the company has the option to proceed with a voluntary bankruptcy filing.
The CIT Board approved the proceeding on November 1, with a view to reducing the total debt by approximately $10 billion, significantly reducing liquidity needs over the next three years, enhance capital ratios and accelerate the company's return to profitability. Subsequently, the companyfiled for confirmation of the plan with the U.S. Bankruptcy Court for the Southern District of New York.
On October 30, the re-organization plan got a boost following an agreement with Carl Icahn of Icahn Capital LP, for a $1 billion committed line of credit, which incremented CIT's $4.5 billion expansion facility set aside earlier.
Amidst increasing liquidity support and "overwhelming" support from debt-holders, the debt restructuring and subsequent 'out-of-court' bankruptcy proceedings need only to look out for the hearing from the Bankruptcy court, scheduled for December 8, 2009, for the final go-ahead.
CITGQ.PK is currently trading at $0.192, down $0.0008 or 4% on 2.87 million shares.
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