CIT Group tries to reinstate $1.3 billion terminated conduit facility

By Angela McDaniels

Tacoma, Wash., Oct. 26 - CIT Group Inc.'s $1.3 billion conduit facility due Dec. 18, 2009 has been terminated, and the company is trying to negotiate an amendment and waiver of the termination.

About $600 million is currently owed under the facility, according to an 8-K filing with the Securities and Exchange Commission.

CIT said that some miscalculations related to the calculation of specific lending limitations, such as concentration limits, resulted in an over-advance, which counted as a termination event under the terms of the facility.

The over-borrowings were repaid once the errors were discovered, and the company said the borrowings were over-collateralized and the dollar amount of the receivables in the collateral pool were unaffected.

The facility lenders have requested economic compensation for a waiver. The company said it believes this is unwarranted given the over-collateralization of the facility and other sources of liquidity available to CIT.

Because of this, the company will let the facility terminate if an amendment and waiver cannot be obtained on "reasonable economic terms," and CIT will finance its trade receivables from existing liquidity and, once completed, its $4.5 billion incremental credit facility.

CIT is a New York-based lender to small businesses and middle-market companies.

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