NEW YORK (
investors received a bittersweet boost on Monday, with shares soaring after the lender announced a sweetened deal for bondholders.
CIT stock jumped more than 16% to $1.01 on the news. Still, its shares have fallen mightily from over $4.25 as recently as April, as the corporate lender barely averted bankruptcy.
CIT said on Monday that it sweetened its deal to repurchase $1 billion worth of floating rate senior notes due Aug. 17. Those bond holders will now receive $875 for each $1,000 worth of debt they hold, 6% higher than the $825 per $1,000 initially offered but far below face value.
CIT has already received enough offers to go ahead with the debt restructuring. Almost 65% of notes were offered for tender, vs. a minimum requirement of 58%. Chairman and CEO Jeffrey Peek said the company is now in a position to move forward.
"We are pleased to announce a constructive resolution to the tender offer as we continue to make progress in the development and execution of a broad restructuring plan that positions CIT for the long-term," Peek said in a statement.
Federal regulators turned a cold shoulder to CIT when the company came to them out of desperation to access capital and debt guarantees, as larger banks like
Bank of America
and others have done.
While other non-bank lenders like
have accessed the FDIC's guarantee program, CIT was left to hammer out a refinancing plan with bondholders on the eve of its impending collapse.
-- Written by Lauren Tara LaCapra in New York