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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: CalculatedRisk who wrote (211529)7/21/2009 1:09:57 PM
From: RockyBalboaRead Replies (1) of 306849
 
Thanks for pointing this out. This is loan sharking indeed. Recently I was sloppy in reading the terms and posted the "DIP" loan as being L+10. But this is more like L+19.5 for drawn amounts (5+2+13). Then add the prepayment penalty of initially 6.5 (if applicable). 2B are already drawn. This is a great deal for those who tender the bonds at 82.5% and lend them the money for that.

it is not super senior (to other senior secured bonds), from what I read:


The Credit Facility will be secured by a perfected first priority lien on substantially all unencumbered assets of the Guarantors, which shall include 100% of the stock of CIT Aerospace International, and 65% of the voting and 100% of the non-voting stock of other first-tier foreign subsidiaries (other than direct subsidiaries of the Company), in each case owned by a Guarantor.

and yet another fee:


Borrowings under the Credit Facility may be prepaid, subject to a prepayment premium in the amount of 6.5% of the amounts prepaid or commitment reduced (the “Call Premium”), declining ratably to zero over the first 18 months following entry into the Credit Facility, provided that no Call Premium will apply if the borrowings are repaid as part of or following a restructuring plan for the Company and its subsidiaries approved by a majority in number of the Steering Committee.


The story is still wrong on the details:

finance.yahoo.com

That $3 billion loan comes at a high price -- an interest rate of about 10.5 percent.
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