CIT Group Inc., the provider of financing to small
businesses and middle market companies, entered into a $3 billion loan facility
provided by a group of the company’s major bondholders. CIT further announced
that it intends to commence a comprehensive restructuring of its liabilities to
provide additional liquidity and further strengthen its capital position.

CIT is paying roughly 10.5% for the money, which should
enable the troubled small- and medium-sized business lender to meet obligations
on about $1 billion in debt coming due in August, the Wall Street Journal
reported. The emergency loan would provide temporary financing to CIT so it
could launch a debt exchange offer to free itself from upcoming debt maturities.

CIT in a statement said that the actions, including a $3
billion secured term loan with a 2.5 year maturity, are intended  to provide CIT with liquidity necessary to
ensure that its important base of small and middle market customers continues
to have access to credit. Term loan proceeds of $2 billion are committed and
available today, with an additional $1 billion expected to be committed and
available within 10 days.

 “We are pleased that
CIT is in a position to continue to serve our valued small business and middle
market customers,” said Jeffrey M. Peek, Chairman and CEO.  “We appreciate the loyalty of our customers
and the support we have received from numerous industry associations,
particularly over the past few weeks.  We
are also extremely grateful to our employees for their continued hard work and
dedication. With today’s announcement, our Board of Directors, management team,
advisors, and a steering committee of bondholders, who are lenders under the
Term Loan Financing, are now actively focused on a restructuring plan that will
better position our company for the long term. 
We look forward to continuing to work closely with the bondholders and
all of CIT’s key stakeholders to achieve our objectives.”

As the first step in a broader recapitalization plan, CIT
has commenced a cash tender offer for its outstanding Floating Rate Senior Notes
due August 17, 2009 (the “August 17 Notes”) for $825 for each $1,000 principal
amount of notes tendered on or before July 31, 2009. Lenders in the Term Loan
Financing have agreed to tender all of their August 17 notes. Additional
details of the tender offer are described below. The Company and the Term Loan
Financing steering committee will work together on the balance of the
recapitalization plan, which is expected to include a comprehensive series of
exchange offers designed to further enhance CIT’s liquidity and capital.

CIT is a major lender to small- and medium-sized businesses.
Its failure could cause disruptions in the apparel sector and other parts of
the retail industry. CIT tried to get more government support last week, but
those talks broke down on Wednesday.