CIT nears deal on $10bn new credit line to stave off demise
CIT Group, the stricken US lending giant, is negotiating a new credit facility in a key step in its continuing fight against bankruptcy.
CIT is understood to be nearing a deal on new financing worth as much as $10bn (£6.3bn), which could help it pay off debt obligations.
But it continues the fight to renegotiate the terms of some of its existing credit lines with lenders, and if it succeeds it could end up opening a much smaller new credit facility than the one that is being explored.
The existing credit lines include the $3bn loan CIT managed to secure in July that staved off what looked like an imminent bankruptcy filing.
Earlier yesterday, shares of CIT had rocketed by 11 per cent to $1.86 in early trading on US markets following talk the firm could be merged with rival lender IndyMac. It was thought that hedge fund manager John Paulson, whose hedge fund company controls IndyMac, was behind the plans, although the hopes later subsided.
CIT is scrambling to line up new financing and restructure its balance sheet as billions of dollars in debt comes due over the next year.
The firm, which relies on debt sales to fund its business, has been fighting for survival since the credit crunch shut mortgage markets.