Thursday, July 16, 2009

Early Action

AlphaNinja - Markets flat. Lots of confusion over CIT.

It appears that CIT has obtained (or is quite near securing) private financing to stay in business. Bailout or not, it appeared the equity would be gone anyway-->> so this could be a positive development, with the private sector doing the bailing out...

A number of private equity firms and fixed incomve investors have expressed interest in talking to CIT about providing financing that would be secured by some of the company's currently encumbered assets, such as airlines and rail cars.
If it materializes, that financing would be incumbent on CIT gaining approval from regulators to move assets from the finance company to its bank.

These approvals are all CIT is currently asking of regulators, who have thus far indicated they would provide no addtional support for the company.

And so CIT finds itself in the postion of needing the approvals in order to have a chance to secure private capital and having regulators who appear unwilling to ofer those so called "non-objections."

The company is running out of time as its liquidity erodes quickly. If it could secure the private financing, CIT believes it could then buy enough time to pursue debt for equity swaps on some of its debt and have its capital structure properly aligned to prevent any future liquidity concerns.
Winners and losers:

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