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Goldman Sachs plans to trim the rescue loan it arranged for CIT Group by $875 million to $2.125 billion, CIT said on Friday.
CIT [CIT
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], which has been struggling to finance itself amid the credit crunch and recession, said it is effectively removing the part of the loan it hadn't taken, according to a filing with regulators.
The commercial lender paid $285 million as a fee to Goldman [GS
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] for reducing the loan and it has posted an initial $250 million in collateral, according to the filing.
In return, Goldman has agreed it will not terminate the loan should CIT file for bankruptcy.
Goldman had been seeking to amend the loan since earlier this month, according to reports.
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Photo by: Ernst Moeksis |
The bank had been due a payment of $1 billion if CIT filed for bankruptcy, a source told Reuters.
CIT is likely to file for bankruptcy in the coming days, analysts have said.
The lender has offered investors two options: an exchange of bonds for new securities and equity, avoiding a bankruptcy filing; approval of a reorganization plan before the company files for bankruptcy.
Separately, in a statement Friday, CIT said an independent balloting company is counting more than 150,000 ballots from investors on the exchange and restructuring plan, which expired on Thursday.
The company did not say how long this process might take. CIT shares fell almost 12 percent to 84 cents in pre-market trading.
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