Comments on: CIT BondHolders to Fund $3 Billion http://www.ritholtz.com/blog/2009/07/cit-bondholders-to-fund-3billion/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 20:08:08 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: ChickenLittle http://www.ritholtz.com/blog/2009/07/cit-bondholders-to-fund-3billion/comment-page-1/#comment-195411 ChickenLittle Mon, 20 Jul 2009 15:02:38 +0000 http://www.ritholtz.com/blog/?p=32833#comment-195411 Andy T hit the nail on the head. I have done financial restructuring as a lawyer for decades. That is how you do it. You loan against all the otherwise unsecured assets, you make sure the loan proceeds go to pay your debt, and, most importanly, you avoid having a debt which is non-performing. Then, one of two things happens: (1) the debtor has time and comes out ok , during which time you have a performing debt (and as Andy says, may be able to sell out for a profit); or (2) the debtor goes belly up, but at a later date and you are fully secured. Andy T hit the nail on the head. I have done financial restructuring as a lawyer for decades. That is how you do it. You loan against all the otherwise unsecured assets, you make sure the loan proceeds go to pay your debt, and, most importanly, you avoid having a debt which is non-performing. Then, one of two things happens: (1) the debtor has time and comes out ok , during which time you have a performing debt (and as Andy says, may be able to sell out for a profit); or (2) the debtor goes belly up, but at a later date and you are fully secured.

]]> By: I-Man http://www.ritholtz.com/blog/2009/07/cit-bondholders-to-fund-3billion/comment-page-1/#comment-195391 I-Man Mon, 20 Jul 2009 13:57:13 +0000 http://www.ritholtz.com/blog/?p=32833#comment-195391 Can we say... "double down"? Can we say… “double down”?

]]> By: Andy T http://www.ritholtz.com/blog/2009/07/cit-bondholders-to-fund-3billion/comment-page-1/#comment-195356 Andy T Mon, 20 Jul 2009 05:13:31 +0000 http://www.ritholtz.com/blog/?p=32833#comment-195356 Calvin Jones.... I'm not sure the exact math involved...but this is what someone postulated on clusterstock blog ~~~~~~~~~~~~~~~~~~~~ So Bill Gross and pals just ran off with $10 billion+ of CIT Group's best assets and for $3 billion. This $3 billion loan is secured by $10 billion + of CIT's best unecumbered assets (according to Reuters), so when the inevitable bankruptcy comes, Bill Gross and pals are going to make a killing. Meanwhile other shareholders and creditors get totally screwed and get none of the $10B of unencumbered assets. ~~~~~~~~~~~~~~~~~~~~~~~~~ Also, the deal might cause a "relief rally" in all the other debt, which may give Pimpco an "out" for their existing underwater crap. Meanwhile the nearly 3bn the USG gave them previously????? What happens to that? Well, it's only money..... Calvin Jones….

I’m not sure the exact math involved…but this is what someone postulated on clusterstock blog
~~~~~~~~~~~~~~~~~~~~
So Bill Gross and pals just ran off with $10 billion+ of CIT Group’s best assets and for $3 billion. This $3 billion loan is secured by $10 billion + of CIT’s best unecumbered assets (according to Reuters), so when the inevitable bankruptcy comes, Bill Gross and pals are going to make a killing.

Meanwhile other shareholders and creditors get totally screwed and get none of the $10B of unencumbered assets.
~~~~~~~~~~~~~~~~~~~~~~~~~
Also, the deal might cause a “relief rally” in all the other debt, which may give Pimpco an “out” for their existing underwater crap. Meanwhile the nearly 3bn the USG gave them previously????? What happens to that? Well, it’s only money…..

]]> By: Calvin Jones and the 13th Apostle http://www.ritholtz.com/blog/2009/07/cit-bondholders-to-fund-3billion/comment-page-1/#comment-195350 Calvin Jones and the 13th Apostle Mon, 20 Jul 2009 04:07:04 +0000 http://www.ritholtz.com/blog/?p=32833#comment-195350 Andy T: The question is: why are they even doing this? CIT is toast. This only prolongs the agony. Andy T:
The question is: why are they even doing this? CIT is toast. This only prolongs the agony.

]]> By: Andy T http://www.ritholtz.com/blog/2009/07/cit-bondholders-to-fund-3billion/comment-page-1/#comment-195343 Andy T Mon, 20 Jul 2009 02:55:30 +0000 http://www.ritholtz.com/blog/?p=32833#comment-195343 This is definitely throwing good money after bad, but if Pim(p)co were a good trader they were probably buying up a bunch of the super distressed sells last few days knowing that if they tossed a few bones at this problem they could probably trigger a massive rally in all the debt they hold, as the largest debt holder in CIT. This is what some would refer to as a "leverage" play....you sacrifice a few dollars to make money on all the rest of the crap you own. Under this scenario I would expect them (Pimpco) to be selling out their debt positions on any rally over the next few weeks. This move allows them to unwind their exposure at better levels...trying to turn some lemons into lemonade....at least as much as they can do. They won't do this again....the next time CIT is on the ropes, they'll go down for good. This is definitely throwing good money after bad, but if Pim(p)co were a good trader they were probably buying up a bunch of the super distressed sells last few days knowing that if they tossed a few bones at this problem they could probably trigger a massive rally in all the debt they hold, as the largest debt holder in CIT. This is what some would refer to as a “leverage” play….you sacrifice a few dollars to make money on all the rest of the crap you own. Under this scenario I would expect them (Pimpco) to be selling out their debt positions on any rally over the next few weeks. This move allows them to unwind their exposure at better levels…trying to turn some lemons into lemonade….at least as much as they can do.

They won’t do this again….the next time CIT is on the ropes, they’ll go down for good.

]]> By: MRegan http://www.ritholtz.com/blog/2009/07/cit-bondholders-to-fund-3billion/comment-page-1/#comment-195342 MRegan Mon, 20 Jul 2009 02:49:34 +0000 http://www.ritholtz.com/blog/?p=32833#comment-195342 http://www.auctionzip.com/cgi-bin/auctionview.cgi?lid=655652 This link is to an auction being held in Houston, Tx. Take a look at the yrs of the vehicles to be auctioned. Much of it very recent. Things are breaking and they can't stop it. There are significant amounts 0f mechanized capacity in this country sitting idle and 'rotting'. A smart person would be on the phone to Sao Paulo looking to line up a Brazilian partner- Petrobras recently found oil on land. I can hardly believe this came to auction stage. It should be on cargo ships en route to parts unknown by now. 20 Mack Gin Pole Trucks- 2006 to 2008 vintage- wonder who did the leasing deal for that company... http://www.auctionzip.com/cgi-bin/auctionview.cgi?lid=655652

This link is to an auction being held in Houston, Tx. Take a look at the yrs of the vehicles to be auctioned. Much of it very recent. Things are breaking and they can’t stop it. There are significant amounts 0f mechanized capacity in this country sitting idle and ‘rotting’.

A smart person would be on the phone to Sao Paulo looking to line up a Brazilian partner- Petrobras recently found oil on land. I can hardly believe this came to auction stage. It should be on cargo ships en route to parts unknown by now.

20 Mack Gin Pole Trucks- 2006 to 2008 vintage- wonder who did the leasing deal for that company…

]]> By: matt http://www.ritholtz.com/blog/2009/07/cit-bondholders-to-fund-3billion/comment-page-1/#comment-195341 matt Mon, 20 Jul 2009 02:33:42 +0000 http://www.ritholtz.com/blog/?p=32833#comment-195341 I thought that this was announced on Friday that JPMorgan and Goldman were going to provide a 3 billion bridge I thought that this was announced on Friday that JPMorgan and Goldman were going to provide a 3 billion bridge

]]> By: Cursive http://www.ritholtz.com/blog/2009/07/cit-bondholders-to-fund-3billion/comment-page-1/#comment-195340 Cursive Mon, 20 Jul 2009 02:21:55 +0000 http://www.ritholtz.com/blog/?p=32833#comment-195340 Good for another 20 points on the S&P 500! The battle bots who are about to die salute you! Good for another 20 points on the S&P 500! The battle bots who are about to die salute you!

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