CIT sheds fat to raise cash

Source: Exec Digital USA

Date :22/04/2008 04:27:43

Commercial finance company CIT Group Inc. has today announced the sale of $1.5 billion of its stock in order to raise capital amid fears of economic recession.

The sale of common stock and convertible preferred stock is 50 percent more than planned, according to the New York-based company, with offerings that dilute existing shareholders.

CIT said it sold $1 billion in common stock – equating to 91 million shares at $11 each – and a further $500 million in preferred stock carrying an 8.75 percent dividend, convertible to $12.65 per share.

Losses

Net profits from the sale total about $1.44 billion, which the company intends to use for general corporate purposes, including the payment of $8 million in preferred stock dividends and $23 million of interest on junior subordinated notes for the third quarter.

This decision follows a reported first quarter loss for CIT of $257.2 million, which has led to a 60 percent cut in its dividend and the possibility of the company selling its railcar leasing business.

April 22, 2008