If he prevails in derailing CIT Group’s debt-swap plan and gains control of the struggling lender, Carl Icahn said he’ll combine the company’s bank with the firm’s factoring and vending businesses and then spin it off to shareholders.
In an interview with The Post, the billionaire yesterday outlined what he would do with the debt-laden CIT, which is hurtling ever closer to filing for bankruptcy following a debt-exchange proposal that has fallen flat with bondholders.
At the heart of Icahn’s plan is jumpstarting the company’s bank, and setting up a separate management team to run it.
“You would have an infinitely better chance at getting bank approval with new owners than these guys do,” said Icahn, who blasted CIT’s board for their management of the company.
The Federal Deposit Insurance Corp. in July banned the banking unit from receiving any new deposits.
CIT late last year received $2.3 billion in federal rescue cash amid the company’s cash squeeze, but since then has seen its financial health deteriorate further with the credit crunch.
Earlier this month, CIT CEO Jeffrey Peek, who is widely seen as putting the company into its current predicament, announced he would step down at year-end.
Icahn yesterday launched a full-court press to recruit more bondholders to nix CIT’s pre-pack bankruptcy proposal, offering the debtholders a guaranteed 60 cents on the dollar for 30 days if they reject the offer, effectively promising to shield the creditors from any downside.
“We got hundreds of calls today,” he said, adding he believes there is a good chance he will defeat CIT’s proposal.
Regardless of how bondholders vote, however, sources said a voluntary or forced bankruptcy filing by CIT will likely happen because the company must make an $800 million debt payment by Nov. 3.
The lender said in a prepared statement, “The Company is confident that CIT will emerge as a strong bank holding company with improved capital, liquidity and earnings potential.”