Icahn Provides Financing Commitment To CIT

Billionaire investor Carl Icahn has committed to providing a new $4.6 billion term loan to CIT Group, Inc. (CIT).

In a letter to the embattled lender, which is struggling to restructure itself, Icahn said the loan would be structured as an expansion of CIT's existing $3 billion rescue loan put in place by a group of the firm's largest bondholders in July. In order to close and fund Icahn's loan on a timely basis, CIT needs to accept his commitment by 6 p.m. EDT Tuesday, Icahn said.

Icahn's loan would be conditioned upon CIT receiving amendments from its existing lenders to allow Icahn and his backers to share collateral on an equal basis with them, according to the letter.

Earlier in the day, Icahn announced a 30-day tender offer for small bondholders' securities at 60 cents on the dollar, "assuring a floor price in the event the notes trade lower."

CIT has been working its key bondholders to put in place a new $4.5 billion financing as it races toward this Thursday's deadline for bondholders to vote on its restructuring plan. This loan is being arranged by Bank Of America.

Icahn, who is CIT's largest bondholder with $2 billion in debt, threatened to "challenge the validity" of CIT's existing loan "through the courts" if lenders to that facility refuse to grant CIT the amendments and "force" the firm to close on the Bank Of America facility.

In the letter Icahn said he is "eager to work with (CIT) through the night" to close the loan and "save the company a significant amount of money."

Icahn last week offered to underwrite the loan for CIT. In Tuesday's letter, he said his loan would save CIT around $112.5 million in fees and wouldn't be dependent on a "vote for or against" the company's restructuring plan.

Curt Ritter, a spokesman for CIT, couldn't be reached for comment.

-Kate Haywood, Dow Jones Newswires; 212-416-2218; [e-mail]