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Can Carl Icahn's $6 Billion Offer Save CIT?

Posted by: Stacy Perman on October 19, 2009

Here comes another turn in the ongoing saga of embattled CIT Group: billionaire investor and corporate rattler Carl Icahn, a CIT bondholder, sent a letter to the company’s board of directors today offering a $6 billion loan. According to the AP, Icahn said his loan would save the company $150 million in fees while criticizing CIT’s board for its restructuring bid, calling it a deal that favored large bondholders at the expense of small investors – and undervaluing the company.

Icahn’s proposal comes just days after CIT offered bondholders a debt swap – current debt for debt that matures at a later date as well as some stock. It also comes on the heels of last week’s announcement that CEO Jeffrey Peek would step down by the end of this year – an announcement that arrived one month after CIT said it was extending Peek’s contract until 2010.

Reader Comments

Carol Cross

October 20, 2009 06:17 PM

Apparently, Carl Icahn, who is a CIT bondholder, believes that his offer is in the best interests of the bond holders!

He evidently doesn't believe that his loan would be a matter of forestalling the inevitable and has faith that CIT can survive and save $150 million in fees.

I'm sure that the terms of the loan will protect his interests, one way or the other.

Carl Icahn is not altruistic, is he? The government already has an interest in CIT and maybe they will believe that CIT is too big to fail and will increase their investment if the franchise sector doesn't fall to pieces and some of their big loans default?

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