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| Music Forum Index » Rush Music Forum » Icahn was going to attempt takeover of CIT, but failed... |
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| LIBERATOR... |
 Posted: Sun Nov 01, 2009 3:06 am |
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Guest
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Hey Dick, I read the story about Icahn attempting to get CIT.
Can he do it another way? It wasn't really indicated if it was a dead
issue other than he failed at this method.
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http://online.wsj.com/article/SB125665033000610225.html
OCTOBER 28, 2009 Icahn Sets Out to Derail CIT's Revamp
By KATE HAYWOOD and MIKE SPECTOR
Billionaire investor Carl Icahn said it was time small bondholders
"stood up" to CIT Group Inc. as he launched a campaign to derail the
embattled small-business lender's restructuring plans.
Mr. Icahn early Tuesday announced a 30-day tender offer for small CIT
bondholders' securities at 60 cents on the dollar, "assuring a floor
price in the event the notes trade lower." Mr. Icahn said bondholders
wishing to participate in his offer must first vote against CIT's
proposed debt-exchange offer and prepackaged bankruptcy plan.
Carl Icahn
Bondholders have until 11:59 p.m. Thursday to exchange their debt for
new debt that matures later and preferred stock in a reorganized CIT.
The company hopes to trim some $31 billion in bond debt by about $5.7
billion.
If CIT doesn't get enough takers, the company plans to restructure
through a prepackaged bankruptcy, which could be filed by early next
week. CIT, which lends to about a million small and midsize
businesses, would aim to have enough creditor support to exit from
bankruptcy in one or two months.
Under federal law, bankruptcy plans are deemed accepted by a class of
creditors if two-thirds of the debt's amount and more than half the
individual creditors vote in favor of a deal. Mr. Icahn holds some $2
billion of CIT's bonds -- making him CIT's largest bondholder -- and
needs to garner support from other creditors to block CIT's plan.
Most large bondholders have rejected Mr. Icahn's overtures, said
people close to CIT, leaving him to solicit smaller investors. Right
now, the holdings "aren't enough to move the needle," said a person
familiar with the situation.
In an interview Tuesday, Mr. Icahn said CIT's management has done a
"terrible" job running the century-old commercial lender. He also
accused the company of "scaring the hell out of everyone" when it told
bondholders that CIT would face a "free-fall" bankruptcy if they
rejected the lender's plan.
"There are a lot of bondholders that definitely don't like the plan,
but the scare tactics get them a bit nervous," Mr. Icahn said. "We are
saying you can stand up to this establishment."
Mr. Icahn purchased his bonds over the past few months for about 60
cents on the dollar. In letters, he said he believes CIT's bonds would
be worth between 80 cents and par in liquidation, his preferred
course.
CIT has said bondholder claims would be valued between six cents and
37 cents on the dollar if the company's plans fail and it is forced to
liquidate.
CIT is offering bondholders 70 cents on the dollar plus equity in the
reorganized company if they vote in favor of a prepackaged bankruptcy.
If they agree to the exchange offer, bondholders can get as much as 90
cents on the dollar of new debt plus some equity.
CIT remains confident it will receive the necessary votes to approve a
prepackaged bankruptcy should its exchange offer fail, said people
familiar with the matter.
"The fact that he is now trying to pay for 'no' votes from the small
bondholders shows he's failed to convince the many major bondholders
he's spoken to that a free-fall bankruptcy makes any sense
whatsoever," said Jeffrey Werbalowsky, the adviser to CIT bondholders.
In a statement, CIT said Mr. Icahn had made an "ill-defined" proposal
that asked bondholders to accept a "vague promise." The company also
said Mr. Icahn has misrepresented the "fundamental economics" of CIT's
restructuring plan. |
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