Lender CIT Gets Cash From Bondholders

The big commercial lender CIT seems to have narrowly avoided bankruptcy for now. The company confirmed that it has struck an agreement with major bondholders for a $3 billion bailout. CIT hopes the plan will give it time to restructure its debts.

Copyright © 2009 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.


The big commercial lender CIT confirmed last night that it has struck an agreement with major bondholders. CIT was headed for bankruptcy, but bondholders agreed to give CIT a $3 billion emergency loan.

NPR's Jim Zarroli has more.

JIM ZARROLI: The company said a group of private bondholders had agreed to give it cash, although it will have to pay a hefty interest rate of 10 and a half percent. It also said it would try to alleviate some of its large debt burden by offering to buy back some of its notes at reduced rates. CIT said in a statement that it believes the moves will allow it to better position itself for the future. CIT lends money to almost a million small and midsized businesses, but it got into trouble because of its involvement with student loans and subprime mortgages. It got $2.3 billion from the government's Troubled Asset Relief Program last fall.

Last week, the Treasury Department said it had turned down CIT's request for additional money. That forced the company to turn to its largest bondholders for help. CIT is not out of the woods yet. It still needs permission from regulators to transfer some of its assets from a holding company to its bank in Utah. CIT also has to restructure billions of dollars in outstanding debt. That includes a billion dollars due next month alone.

Jim Zarroli, NPR News, New York.

Copyright © 2009 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.



Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.