By Juan Lagorio
NEW YORK (Reuters) - CIT Group Inc
Still, the 101-year-old lender reiterated it could file for bankruptcy if the offer failed and it did not get additional financing.
"The company is doing what it can to try to avoid a bankruptcy court," said KBW analyst Sameer Gokhale. "It may be the best possible outcome for all stakeholders, including the government with its $2.3 billion TARP investment."
Problems at CIT stem in part from Chief Executive Jeffrey Peek's decision earlier in the decade to expand into subprime mortgages and student loans.
Concerns about the company's financial health increased even after CIT received $2.33 billion from the government's Troubled Asset Relief Program in December. The New York-based lender estimated it has lost more than $1.5 billion in the second quarter, hurt by bad loans and writedowns.
CIT stock was up 23 percent at 91 cents in early trading.
CHANGES IN OFFER
On Monday, CIT launched a tender offer for $1 billion of notes due in August in the first step of a restructuring plan after the collapse of rescue talks with the U.S. government.
The lender to small and middle-size companies said on Friday that it had increased a premium for bondholders who enter the restructuring plan before July 31 to $50 per $1,000 of principal amount.
Bonds tendered before July 31 will be bought back for $825 per $1,000 face amount, while those tendered later will be bought for $775.
Initially, the company had offered to buy back the bonds for $800 per $1,000 face amount, with a $25 premium for those noteholders that tendered them by July 31.
"Pretty clearly they are giving an incentive to people to do it sooner rather than later, so there may be some value associated with getting more certainty of completing the transaction sooner rather than later," Gokhale said.
CIT's floating-rate notes due on August 17 rose about 2 cents on the dollar to 82 cents, according to MarketAxess data.
The company's debt insurance costs were little changed from late Thursday, at about 46 percent as an upfront cost early on Friday, according to Phoenix Partners Group data.
CIT said its estimated funding needs for the year ending June 30 include $7 billion of unsecured debt. The company has about $40 billion of long-term debt, according to independent research firm CreditSights.
CIT has been denied access to a U.S. Federal Deposit Insurance Corp program to sell government-backed debt, and the U.S. government declined further assistance, forcing the company to turn to private investors for critical cash.
CIT could sell aviation-finance and rail-finance operations as part of its restructuring plan, The Wall Street Journal said, citing sources familiar with the matter.
(Reporting by Juan Lagorio, Walden Siew and John Parry; Editing by Lisa Von Ahn)
