CIT bondholder loans hold off bankruptcy
July 20, 2009
Last week, analysts worried about the effects of the potential bankruptcy of financing provider CIT Group after talks with the federal government about a bailout failed. CIT group, which has provided funding for restaurant operators such as Dunkin' Donuts and Pizza Hut, has since announced that it entered into a $3 billion secured loan agreement with a group of the company's major bondholders.
As the first step in a broader recapitalization plan, CIT has commenced a cash tender offer for its outstanding Floating Rate Senior Notes due Aug. 17, for $825 for each $1,000 principal amount of notes tendered on or before July 31, 2009.
Analysts, however, are wary of the deal, calling it a stop-gap measure that only gives the company time to restructure without filing for bankruptcy, according to The Star-Ledger (New Jersey). Analysts say the company is still dealing with problem loans and future write-offs and may consider are selling parts of its loan portfolio.
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Christa is editor of QSRweb.com and contributes to FastCasual.com and PizzaMarketplace.com. She has experience in the restaurant industry as well as 15 years as a journalist.