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CIT cuts $3bn salvation deal

US lending giant CIT Group last night cut an eleventh-hour deal with its key bondholders for $3bn(&pound;1.8bn) in financing that will save the 101-year-old from the jaws of bankruptcy.<br /><br />CIT, which suffered a liquidity crunch and is straining under its multi-billion dollar debt load, now aims to restructure outside of court.<br /><br />The firm, which lends to nearly a million small and mid-sized businesses, had been in frantic talks with the bondholder group to hammer out the rescue financing deal before the markets open in the US today.<br /><br />Investment bank Houlihan Lokey was leading the talks with the bondholders, the largest of which is Pacific Investment Management. <br /><br />The lender&rsquo;s problems came to light two years ago, in the wake of chief executive Jeffrey Peek&rsquo;s decision earlier in the decade to expand its subprime mortgage and student loans business.<br /><br />In December, CIT gained the status of a bank holding company so that it could draw $2.33bn of taxpayers&rsquo; money from the US government&rsquo;s Troubled Asset Relief Program (Tarp).<br /><br />And last Wednesday CIT said that bailout talks with the government had fallen apart, heightening the chances it would file for bankruptcy.<br /><br />CIT has about $40bn of long-term debt, according to independent research firm CreditSights. About $1.1bn of debt is due in August, followed by about $2.5bn by the end of the year.