CIT reveals accelerated plan for appointing directors in potential prepackaged reorganization plan

By Susanna Moon

Chicago, Oct. 28 - CIT Group Inc. said it modified its amended offering memorandum dated Oct. 16, supplemented on Oct. 23, that will accelerate changes to its board of directors in a potential prepackaged plan of reorganization.

In CIT's plan of reorganization, a majority of the directors will be individuals who were identified by bondholders, according to a company press release.

After the prepackaged plan of reorganization, the board will consist of 13 directors, including 12 independent directors and the chief executive officer appointed by the new board.

The independent directors will include five incumbent directors identified by the current nominating and governance committee of the board, four directors identified by the steering committee of lenders under the process described in the offering memorandum and three directors identified by bondholders who are not members of the steering committee.

The offering memorandum previously provided that if the company were to complete its restructuring through a prepackaged plan of reorganization, incumbent directors would constitute no more than five of the 13 directors to be elected at the 2010 annual meeting.

Of the three candidates to be identified by other bondholders, any holder who is not a steering committee member and has at least 1% of the outstanding principal amount of CIT bonds and unsecured bank debt may recommend up to three candidates to the nominating and governance committee.

The committee may not select more than one candidate put forward by any one bondholder.

The appointment of all directors is subject to prior notice to the Federal Reserve Bank of New York, and there can be no assurances that the Federal Reserve Bank of New York will not disapprove of a particular candidate, the release noted.

If the New York Fed disapproves of any candidate, another individual identified by the steering committee or other bondholders will be appointed "as promptly as practicable thereafter," CIT said.

In the event of a prepackaged plan of reorganization, the new board will form a committee to recommend CEO candidates to the full board for approval. The size and mandate of the committee will be determined by the new board, but non-incumbent directors are expected to constitute a majority of the committee.

CIT said it continues to believe it has broad support for its restructuring plan among both its large and small bondholders.

D.F. King & Co (800 758-5880 or 212 269-5550) is the information agent, and Financial Balloting Group, LLC (646 282-1888) is the exchange agent for the exchange offers and voting agent for the plan of reorganization.

Band of America Merrill Lynch and Citigroup Global Markets are financial advisers.

Evercore Partners, Morgan Stanley and FTI Consulting are the company's financial advisers and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel in connection with the restructuring plan.

Sullivan & Cromwell is legal adviser to CIT's board of directors.

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

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