Billionaire Carl Icahn Slams CIT Restructuring

mike lewis

• October 20 2009
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Photo: Associated Press

Billionaire, activist investor, and corporate raider are just a few of the terms used to describe Carl Icahn, a CIT stockholder. Another adjective that could be used today is pissed off. Icahn sent CIT a withering letter criticizing its  restructuring plan as “a bad-faith attempt to buy votes,” and he is attempting to unseat CIT’s board, whom he describes as “incompetent and unconscionable.” In the letter, Icahn offers an alternative plan financed through a $6 billion loan he would provide.

According to an article on money.com:

Icahn’s letter skewered CIT’s (CIT, Fortune 500) $6 billion reorganization plan, in which bondholders can exchange current notes for a portion of a series of newly-issued secured notes and/or preferred shares. Instead, he offered to underwrite an alternative $6 billion loan.

Icahn claims the existing plan offers unsecured bondholders below-market rates in exchange for their support for the restructuring, and the company’s largest bondholders will have access to the current plan at the expense of thousands of their smaller counterparts.

“Even worse,” wrote Icahn, “the plan would leave a majority of the existing board, or their chosen successors, in control of our company for years to come.”

CIT issued a press release stating that “This letter is CIT’s first indication of Mr. Icahn’s interest in underwriting an alternative financing and the Company intends to ask Mr. Icahn for more information regarding his proposal.”