NEW YORK (Reuters) – CIT Group Inc (CIT.N) said on Monday it completed its tender offer for $1 billion in debt maturing today, buying the company more time to attempt to restructure its debt and stave off bankruptcy.
The company had said it may be forced into bankruptcy if it the tender was unsuccessful and it was unable to secure alternative financing.
Concerns over CIT’s health have grown since the lender to small and medium-sized companies, which became a Fed-supervised bank holding company in December, failed to receive further government assistance under the FDIC’s Temporary Liquidity Guarantee Program.
CIT said 59.81 percent of the $1 billion floating rate notes eligible for the tender were offered, at a purchase price of $875 per $1000 in debt. CIT will repay notes that weren’t tendered in the offer at their full value, the company said.
“The completion of this tender offer is another important milestone as the company continues to make progress on the development and execution of a comprehensive restructuring plan,” CIT said in a statement.
Last week, the U.S. Federal Reserve ordered CIT to submit a plan for raising capital and meeting debt obligations within 15 days.
CIT agreed that within 60 days it would outline how it will manage credit risk and review its system of setting aside money for loan and lease losses.
Within 75 days, CIT must submit a business plan to improve its financial condition and outline actions to strengthen its management and corporate governance, the Fed said. CIT also requires approval from the Fed before paying dividends or pursuing other transactions.
CIT received a $3 billion, 2-1/2-year emergency loan from its bondholders last month. The company needs its creditors to approve a restructuring plan by October 1, under terms of this loan.
(Reporting by Karen Brettell; editing by Jeffrey Benkoe)