Maybe people who bought CIT on the rumour of a merger orchestrated by John Paulson won’t wind up losing their shirts. The new rumour circulating is that CIT is negotiating a new credit facility that might be as large as $10 billion.
The story was first reported by StreetInsider.com and has now been picked up by Reuters.
Here’s what Reuters says:
The details of the facility are still being negotiated, and its size might be substantially smaller than $10 billion or even zero if the company successfully renegotiates the terms of some of its existing credit lines, two people familiar with the matter said.
Those existing credit lines include a $3 billion loan that CIT clinched from bondholders in July and a financing facility from Goldman Sachs.
CIT badly needs to secure long term funding in order to reassure investors and counter-parties that it is stable enough to stay out of bankruptcy.