What does struggling US commercial lender CIT have in common with peak oil?

Quite a lot, if a rather mysterious offer for some of CIT’s debt is serious. CIT is under pressure from activist investor Carl Icahn over its plan to reduce its $30bn debt load by almost $6bn. Icahn says the terms CIT is offering its existing bondholders to take part in the debt exchange are poor and would destroy the value of their assets.

One fund has offered to take on $1bn of that debt - and it’s apparently raising money for a peak oil fund. But it’s all a little intriguing, as Reuters reports:

NEW YORK (Reuters) - An obscure hedge fund said it offered to buy $1 billion in debt from CIT Group Inc (CIT.N) but declined to identify its source of capital. CIT would not comment on whether it was seriously considering the offer.

The fund, logi Energy, said it was interested in $1 billion of CIT’s middle market lenders debt portfolio.

Logi (or lower-case logi as it calls itself) is certainly somewhat mysterious - as BusinessInsider points out, its main website doesn’t work. Its energy fund website requires a very detailed registration that is only open for accredited investors. Then again, a mysterious hedge fund is almost a tautology. And while staying mum on the source of the financing, logi’s chief investment officer did talk to Reuters, if only to downplay the significance of their offer:

But Ortega told Reuters, “We have an institutional-class investor that is interested in supporting it.” The financing is contingent on CIT accepting the offer.

A spokesman for CIT declined to comment on the proposal. Analysts and energy investors said they had not previously heard of logi.

Ortega said he did not believe the debt offer was a game-changing deal for CIT.

“This is simply a hip pocket opportunity for them,” he said. “Those poor guys have a much bigger problems … CIT has a big chunk of oil and gas debt. We only want a sliver.”

October 21, 2009 11:56am in Oil | Comment