Brushing aside an 11th-hour effort by the billionaire investor Carl Icahn to scuttle the process, CIT Group Inc. said Wednesday that it has raised an extra $4.5 billion as it presses ahead with its restructuring plan.
The embattled firm, a lender to roughly 1 million small and midsize businesses, said it would add the $4.5 billion to a $3 billion loan put in place by a group of the firm's largest bondholders in July.
CIT's announcement came less than 24 hours after Icahn, CIT's largest bondholder, upped the ante on the firm's reorganization plan, giving it less than an hour to respond to his offer to provide $4.5 billion in loan financing while threatening to sue the firm if it went with the rival bondholder loan.
"As a result of the lack of evidence that Mr. Icahn has arranged sufficient funding at this time, CIT's Board of Directors determined that the best interests of the Company and its stakeholders would be served by proceeding with the credit facility provided by a diverse group of lenders," CIT said in a statement.
Icahn asserted that his loan would have saved the company $112.5 million in fees.
Holders of about $31 billion in bonds have until 11:59 p.m. EDT today to exchange their debt for a mix of new bonds that mature later and preferred stock in a reorganized CIT. The company hopes to cut its debt by at least $5.7 billion.
Roughly 50 of CIT's bondholders are lenders to the extra $4.5 billion in financing, which matures in January 2012, people familiar with the matter have said.
If the firm does not get enough support for the exchange offer, it plans to restructure through a prepackaged bankruptcy, which would allow it to reorganize within a couple of months.
If the company's plans fail and it has to be liquidated, CIT said last week that bondholders may get as little as 6 cents on the dollar.