Oct 30, 2009 (MarketNewsVideo.com via COMTEX News Network) -- Goldman Sachs is reducing the credit line it extended to CIT group by $875 million to $2.125 billion, which represents the portion of the credit line CIT had not yet taken out.
In exchange for reducing the credit line and a promise that Goldman would not terminate the loan if CIT filed for bankruptcy, as has been widely speculated in the last few days, CIT paid Goldman a $285 million fee in exchange for restructuring the loan, and posted an additional $250 million in collateral. Under the terms of the old loan, CIT would have had to pay Goldman $1 billion if it filed for bankruptcy.
CIT is offering its investors two options at this point: an exchange of bonds for equity and new securities to avoid bankruptcy, or a reorganization plan before bankruptcy.
CIT shares are down sharply on the news this morning.
The preceeding is a transcript of the MarketNewsVideo.com video published at: http://www.marketnewsvideo.com/?id=200910CIT103009&mv=1.
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