CIT Group to pay off another $537 million in high-cost debt
CIT Group, which provides financing to small and middle-market companies, will redeem all $537 million in outstanding 10.25% Series B second-lien notes maturing in 2013 and 2014. CIT holds more than $40 billion in finance and leasing assets, and it provides capital to more than 1 million small- and middle-market businesses. Last week, the U.S. Senate passed the Small Business Jobs and Credit Act that will create a $30 billion lending fund and provide $12 billion in tax breaks designed to reduce unemployment. The effort to de-leverage and pay down debt arrives after the company sought bankruptcy restructuring in late 2009, a process that included several private capital infusions. In October 2009, CIT expanded an existing $3bn senior secured credit facility with a $4.5bn private capital infusion from a diverse group of lenders. John Thain, CEO of CIT said its latest move will help the company continue to provide funding to the small businesses. CIT sent a redemption notice to the trustee and intends to complete the redemption on these notes on Oct. 21. After the redemption, roughly $1.6 billion of Series B notes maturing in 2015, 2016 and 2017 will remain outstanding. Earlier in the year, CIT repaid $4.5 billion, or 60%, of its first-lien debt and refinanced the balance. "We continue to improve our cost of capital by reducing our existing high cost debt through repayment or refinancing with lower cost funding as we provide much needed financing to small businesses and middle market companies,” Thain said. Write to Jon Prior.