CIT increases payment in tender offer for floaters, lowers threshold

By Angela McDaniels

Tacoma, Wash., Aug. 3 - CIT Group Inc. amended the tender offer for its $1 billion floating-rate senior notes due Aug. 17, 2009 so that all holders who tender by the expiration date will receive $875 per $1,000 principal amount of notes plus accrued interest up to but excluding the settlement date.

The offer expires at midnight ET on Aug. 14.

In addition, the minimum tender condition was lowered to 58% of the notes from 90%. The new threshold is approximately equal to the number of notes that the lenders under CIT's new $3 billion credit facility hold and have promised to tender into the offer.

CIT previously said that if the minimum tender condition is met, borrowings under the new loan will be used to fund the tender offer.

As of 5 p.m. ET on July 31, holders had tendered 64.97% of the notes.

When the offer began on July 20, the company was offering $825 for each $1,000 principal amount of notes tendered by 5 p.m. ET on July 31, which included an early delivery payment of $25 per note. Holders who tendered after the early deadline were to receive $800 per note.

The company amended the offer on July 23 to increase the early delivery payment to $50. The price for notes tendered by the early deadline remained $825, but the price for notes tendered after that time was reduced to $775.

Other amendments made on July 23 include:

• The clarification that each member of the steering committee for the senior secured term loan facility has committed to tender, and each initial new term loan lender participating in the incremental $1 billion portion of the term loan financing is required to commit to tender, its floaters;

• The permission for CIT to accept tendered notes prior to the scheduled expiration date, provided that the minimum tender condition is satisfied;

• The clarification that if the offer is successfully completed, the company and the steering committee do not intend for CIT to seek relief under the U.S. Bankruptcy Code but rather to pursue restructuring efforts through other means; and

• The clarification that if the offer is not successfully completed, the terms of the term loan financing do not permit the company to use the proceeds to make the upcoming maturity payment on the notes, which, unless CIT is able to obtain alternative financing, would result in an event of default under the terms of the term loan financing.

Morgan Stanley & Co. Inc. (800 624-1808 or call collect 212 761-5384) and Bank of America Merrill Lynch (980 388-4813, attention debt advisory services) are the dealer managers. D.F. King & Co., Inc. (800 758-5880 or call collect 212 269-5550) is the depositary and information agent.

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

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