CIT. Canadians win- Taxpayers Lose
For some odd reason ( see “clueless guy” above) the government chose ( I say “chose” because I am pretty certain that in Dec 08 the government had their choice of whatever deal they wanted) Preferred shares as opposed to notes.
They were very careful ( and I am sure they patted themselves on the back for this) to make sure that their shares were ” pari passu with or senior to all other series or classes of Preferred Stock,” ( quoting from the 8k in Dec 08 http://www.sec.gov/Archives/edgar/data/1171825/000089882208001305/letteragreement1.htm)
So they did not even bother issuing notes which means that when bankruptcy occurred….the preferred got the following
” Old Preferred Interests shall be cancelled, terminated and extinguished “
While Canadian unsecured note-holders received the following
“each holder of an Allowed Canadian Senior Unsecured Note Claim shall receive its pro rata share of Series B Notes, equal to a distribution in the amount of 100% of such holder’s Allowed Canadian Senior Unsecured Note Claim (which Allowed Claim constitutes principal plus accrued but unpaid prepetition interest), in full settlement and satisfaction of any Claims held by such holder of an Allowed Canadian Senior Unsecured Note Claim”
One more thing- about the government’s preferred – they finally got kicked off the table. Somewhere they never belonged-
They did not even get a vote on the deal…. outclassed, outdealed and now finally out of our money.
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