CIT bailout

CIT (CIT) has reached an agreement with lenders to stave of bankruptcy, reports WSJ.

The company will get a $3 billion lifeline, allowing it to restructure outside of court. No word yet on whether shareholders will be left with anything more than a couple pennies.

WSJ: The final term sheet still needs to be reviewed by the various financial and legal advisers, said the people familiar with the matter. And there is the chance that a final deal could falter over last-minute negotiations.

Under the proposal, CIT would likely pay interest rates 10 percentage points above the London interbank offered rate, said these people. (As of Friday, three-month Libor stood around 0.5%.) CIT has also agreed to pledge some of its highest-quality loans as collateral on the $3 billion package.

The new loan could act like a “bridge” to a series of debt-exchange offers that CIT would launch in order to get bondholders to swap some of their bonds for equity in the company or for new debt that matures later.

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