CIT Holding Talks for Financing

CIT Group ( CIT), the lender on the brink of bankruptcy, said it is in discussions with potential lenders to secure financing.

CIT's board and management, "in consultation with their advisors, are continuing to evaluate alternatives to improve the company's liquidity," the company said in a statement late Thursday.

"The company is continuing to serve customers," CIT said.

It was reported Thursday that regulators weren't going to bail out CIT. The lender needs about $5.6 billion to avoid a bankruptcy filing, according to a report Thursday by bond research firm CreditSights.

The Wall Street Journal reports CIT executives are scrambling to line up private-sector financing of $2 billion to $3 billion. CIT bondholders, meanwhile, were discussing a plan Thursday evening to swap $5 billion in debt for equity, people familiar with the matter said.

The company could file for bankruptcy protection as early as Friday if it can't raise emergency funds, these people said, the Journal reports.

CIT shares fell 75% Thursday to 41 cents as bondholders made a last-ditch effort to prevent a Chapter 11 filing.

CIT, one of the nation's largest lenders to small and mid-sized businesses, faces $7.4 billion in debt that's due in the first quarter of next year.

CIT, which got $2.3 billion of bailout money in December, had warned that depriving it of more federal aid could imperil about a million corporate borrowers -- from Dunkin' Donuts franchisees to retailer Dillards. But the U.S. government turned down the company's request.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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