Icahn Proposes Tender Offer For Smaller CIT Bondholders

  DOW JONES NEWSWIRES 
 

Billionaire investor Carl Icahn announced a tender offer for CIT Group Inc.'s (CIT) smaller bondholders, which he said have been "disadvantaged by the restructuring process and completely ignored" by the ailing commercial lender.

Icahn said he would provide the protection if the bondholders were willing to support him in his opposition to the company's prepackaged bankruptcy plan.

CIT is facing a Thursday deadline for some of its bondholders to vote on either a $31 billion debt exchange or a plan to file for a prepackaged bankruptcy. Under the bankruptcy plan, CIT would seek Chapter 11 protection with support from enough creditors to quickly get a reorganization plan approved, and emerge from bankruptcy in one or two months.

Icahn said he believes the plan will devalue the company--and allow the current boards to retain control of the company. It has been speculated Icahn would be the largest shareholder in a reorganized CIT if the lender's proposed restructuring plan goes through.

Icahn's offer is a 30-day tender offer at 60% of face value. To qualify for Icahn's offer, bondholders will have to choose not to participate in CIT's exchange offer and most vote to reject the prepackaged plan by the Thursday deadline.

Last week, Icahn offered to underwrite a $6 billion loan to CIT, complaining that a proposed solution hammered out by the company and its largest creditors is too expensive and detrimental to CIT's small bondholders.

CIT's shares were inactive in premarket trading, at $1.07. The stock is down 76% this year, and far under the all-time high of over $60 in 2007.

-By John Kell, Dow Jones Newswires; 212-416-2480; [e-mail]