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Carl Icahn Continues to Lobby CIT Bondholders

October 27, 2009

Billionaire Financier Carl Icahn

According to a Reuters article published this morning, Icahn is being very vocal about his opposition regarding the proposed CIT restructure and his hopes that bondholders will reject the current plan allowing the company to go bankrupt. On Tuesday, he offered the smaller bondholders an assurance that he would guarantee the notes if they did not liquidate for less than 60 cents on the dollar. According to the Reuters article:


The company on Friday warned that if bondholders reject its proposed restructuring it would have to liquidate, which could dampen the recovery value of the bonds. CIT said its unsecured bonds would be worth somewhere between 6 cents and 37 cents on the dollar in this scenario.


Icahn, on the other hand, said CIT’s proposed restructuring will destroy the value of the company and that the current Board of Directors should not be able to retain control of the company.


This Wall Street Journal article journal adds more depth to the offer and Icahn’s concerns:


Mr. Icahn said he believes CIT’s plan will “result in the destruction of value at CIT” and his latest assault is an attempt to “neutralize the variety of scare tactics designed by CIT to coerce noteholders into supporting the company’s plan.”


Mr. Icahn, who previously criticized the company using money to “purchase votes for its exchange offer/prepackaged bankruptcy,” is offering an incentive for brokers and financial advisers of $5 for every $1,000 of notes tendered if they convince their clients to support his plan.


Bloomberg and Forbes are also covering the story.




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