UPDATE: CIT has said it will not receive a bailout from the government. The company is “evaluating alternatives.”
After trading on CIT was halted today, we have been on the edge of our seats waiting to hear whether the troubled lender will get a federal bailout. The debate over whether CIT is big enough to deserve a bailout or whether it’s too far gone to be saved continues to rage, but rather than weigh in there, we decided to look at who will be affected by a collapse of the liquidity-starved lender.
Buyouts Senior Editor Ari Nathanson and I compiled a list of buyout-backed companies which have used CIT as a lead arranger on its credit facility over the last three years, courtesy of Thomson Reuters data.
We came up with 38 companies.* Of those 38, CIT provided a revolver loan to all but two. For companies that haven’t drawn down their revolver (including this week’s run, which has only added to the company’s demise), the sudden disappearance of CIT could mean the sudden disappearance of all liquidity.
The interesting part is the amount of repeat business on the list. It brings new meaning to the “strong lender relationships” often touted by buyout pros. The one thing they don’t brag about is how a “strong relationship” with a failing lender could wind up being worse than no relationships!
For example, Wind Point Partners used CIT for four of its portfolio companies. Thoma Cressey Equity Partners (before Carl Thoma and Brian Cressy split up) also has four CIT-led credit facilities in its portfolio. Sentinel Capital Partners and Baird Capital Partners each have two companies with CIT facilities.
Update: As requested, we ran the data without the “lead arranger” parameter and found that CIT has provided debt in some capacity to 133 companies over the same period (the past three years). Here is the list.
View the entire list of lead arranger deals below.
*We eliminated a few that have since been sold, but haven’t checked that each of the 38 are still owned by their listed PE backer.