CIT working on $10 billion credit facility - Sep. 29, 2009

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NEW YORK (Reuters) -- CIT Group Inc. is negotiating a new credit facility that could total $10 billion, which could help the finance company pay off maturing debt and stave off bankruptcy, people familiar with the situation said.

The details of the facility are still being negotiated, and its size might be substantially smaller than $10 billion, two people familiar with the matter said. The company may forgo the loan if it successfully renegotiates the terms of some of its existing credit lines, the sources said.

The existing credit lines include a $3 billion loan that CIT clinched from bondholders in July and a financing facility from Goldman Sachs. ( GS , Fortune 500 )

CIT spokesman Curt Ritter did not immediately return a call and an e-mail requesting a comment.

CIT ( CIT , Fortune 500 ) shares rose 26 cents to $1.93 in early-afternoon trading, up 15.6%. Earlier, the shares rose about 11% after a newspaper report that hedge fund Paulson & Co. was looking at combining CIT with a Paulson-affiliated bank once known as IndyMac. A person familiar with the matter told Reuters the report was wrong.

CIT is struggling to fund itself after losing access to the unsecured corporate bond market. The company has $3 billion of debt maturing in the fourth quarter, according to a quarterly filing in August. About half of that maturing debt is unsecured and must be refinanced or repaid from the company's dwindling cash holdings.

Regulators have put CIT Bank under a cease-and-desist order, preventing the unit from accepting new deposits. That bank was supposed to be a key source of funding for the company in the future.