CIT Amends Restructuring Plan

Tom Murphy, AP Business Writer

NEW YORK -- CIT Group(CIT Quote), a major lender to small and midsize businesses that has struggled under mounting losses and tight credit availability, has amended its debt restructuring offer to enlist more bondholder support.

The troubled New York-based lender had launched the restructuring effort Oct. 1 with the hope that it will trim at least $5.7 billion from its near-term debt. It is also asking bondholders to approve a prepackaged reorganization plan in case it is forced to file for Chapter 11 bankruptcy protection.

The company said in a statement late Friday that the debt exchange changes have the backing of its board and a steering committee of bondholders. Spokesman Curt Ritter declined additional comment on Saturday.

CIT Group's losses have been mounting as its borrowing costs have outstripped its income amid the credit crunch. It has received $2.3 billion in federal bailout money last fall and a $3 billion emergency loan in July from some of its largest bondholders.

Its customers range from Dunkin' Donuts franchises to department store operator Dillards(DDS Quote) It is also a short-term financier to about 2,000 vendors that supply merchandise to 300,000 stores, according to the National Retail Federation.

Some economists say the company's collapse could hurt a U.S. economy struggling to recover from recession.

CIT Group said the amended restructuring plan includes a mechanism to accelerate repayment of new notes and the shortening of maturities by six months for all new notes and junior credit facilities.

It also includes an increased amount of equity offered to subordinated debt holders and notes maturing after 2018 that had not been solicited.