CIT and Bondholders Negotiating Over Release of Remaining $1 billion

Photo by Idelphoto Courtesy of Stock Expert

Photo by Idelphoto Courtesy of Stock Expert

CIT and its bondholders are negotiating how to release the remaining $1 billion dollars to CIT and have agreed to provide the money by the end of July 1, 2009. CIT has pledged approximately $15 billion dollars in assets as collateral against the loan, which makes this transaction attractive for the bondholders.

CIT plans to transfer some of its customers to its subsidiary bank in Utah. If the deal fails, the Salt Lake City bank is at risk to fail, also.

The Security and Exchange Commission has warned CIT that if it does not secure the money, it will have to begin bankruptcy proceedings. With this move, the economy is beginning to show signs of a recovery. Experts warn that recovery will be slow, however.

Many retailers may be at risk for bankruptcy if CIT fails to receive the money. “The retail sector could be especially hard. CIT serves as short-term financier to about 2,000 vendors that supply merchandise to 300,000 stores, according to the National Retail Federation. Analysts say 60 percent of the apparel industry depends on CIT for financing.”

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One Response to CIT and Bondholders Negotiating Over Release of Remaining $1 billion

  1. Ted Hurlbut says:

    A CIT failure would have severe impact on many smaller and independent retailers. The bodholders are hoping that by refinancing CIT that they’ll buy them time to get things straightened out. There’s a lot a stake here for many small businesses, their employees and customers.

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