CIT Group to prepay $500 million of first lien term loan

Reuters

(Reuters) - Commercial lender CIT Group Inc <CIT.N> said it has given notice that it will prepay $500 million of its $3 billion senior secured first lien term loan on July 15, 2011.

CIT -- which emerged from one of the largest bankruptcies in U.S. history in December 2009 -- said, including the prepayment, it will have eliminated more than $10.5 billion of first lien and second lien debt since the beginning of 2010.

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The prepayment will be made with available holding company cash and will not be subject to any call premium, the company said in a statement.

CIT, run by former Merrill Lynch chief executive John Thain, has been cutting costs and selling assets to pay down high-cost debt left from the 2009 bankruptcy, while Thain seeks new, cheaper sources of financing.

Repaying high-cost debt results in early payment fees, but improves the company's future profitability and sets it up to grow again.

CIT's shares closed at $40.47 on Thursday on the New York Stock Exchange. (Reporting by Brenton Cordeiro; Editing by Joyjeet Das)