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CIT delays filing quarterly report; says there is still doubt about its future

By
August 11, 2009 5:55 AM

CIT said today it was unable to file its quarterly report on time due to the lender's continuing restructuring efforts.

The report was due Aug. 10 and the company said it would file the report Aug. 17.

The company expects to report a loss in excess of $1.5 billion for the quarter ended June 30.

Though CIT received a $3 billion loan from bondholders in an attempt to stave off bankruptcy, the company said in the filing that there is still "substantial doubt" that it can continue as a going concern.

CIT is not able to use the proceeds from the bondholder loan to pay $1 billion in notes due Aug. 17 without the successful completion of a debt tender offer, according to the agreement between CIT and its bondholders. CIT is currently in the midst of a cash tender offer for the $1 billion in notes due next week.

If the tender offer is successful, CIT will use proceeds from the bondholder loan to pay for the tender offer and pay the $1 billion due next Monday. CIT will then begin restructuring the company to improve liquidity and strengthen its capital position. CIT is working to complete a draft of the restructuring plan by Aug. 14.

If the tender offer is not successful and alternative financing is not available, the company will seek bankrutpcy protection, it said in the SEC filing.

"... The company's funding strategy and liquidity position have been materially adversely affected by on-going stress in the credit markets, operating losses, credit ratings downgrades, and regulatory and cash restrictions such that there is substantial doubt about the Company's ability to continue as a going concern," CIT reiterated in the filing.

 


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