CIT Group (CIT) confirmed late Monday a group of the company’s major bondholders agreed to lend it $3bn to continue its lending operations to small- and medium-sized businesses that depend on it to make payroll and meet other operational expenses. Of the loan facility, which matures in 2.5 years, $2bn was made accessible Monday with an additional $1bn expected to be committed and available within 10 days of the announcement. The loan facility means CIT is better positioned to continue extending credit to some commercial businesses that otherwise might face financial hardship, which would likely be felt in the retail market and commercial mortgage space. CIT also said it plans to initiate a sweeping restructuring of its liabilities to bolster liquidity and strengthen its capital position. In the first step of this plan, CIT opened a cash tender offer for some outstanding senior notes due Aug. 17, 2009. CIT offered holders of these notes $825 for each $1,000 principal amount of notes tendered on or before July 31, 2009. “We are pleased that CIT is in a position to continue to serve our valued small business and middle market customers,” said chairman and CEO Jeffrey Peek in a corporate statement. “We appreciate the loyalty of our customers and the support we have received from numerous industry associations, particularly over the past few weeks.” In recent weeks, CIT struggled with financial hardship and credit-rating fallout after it learned it would not receive a second federal bailout on top of the $2.3bn capital injection from the $700 of federal bailout funds. The news that bondholders came to CIT’s rescue arrives on the heels of rumors circulated among media outlets that the company faced imminent bankruptcy. Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published.

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