July 20th, 2009
Closing the loop: CIT gets rescue; Relief for tech spending
The failure of CIT, a financial services firm that lends to small and mid-sized business, has reportedly been averted for now.
The Wall Street Journal reported that CIT’s bondholders are floating the company $3 billion in a last minute rescue.
For Dell, Avaya and other businesses that depend on CIT for financing the news is a relief. As noted previously, a CIT failure had the potential to be a big problem for tech spending.
The big question is whether CIT’s lifeline will lead to a permanent fix of its capital structure. The extra $3 billion does buy some time though. Another uncertainty is whether CIT financing partners will stick around or find alternative financing. Companies like Dell and Avaya are likely to look for other financing arrangements just to be safe.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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