Report: CIT Group again on brink of collapse

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  1. Neubarth
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    Neubarth At the Ballpark July 30th

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    Report: CIT Group again on brink of collapse
    CIT Group shares plunge in premarket amid report lender is again on brink of bankruptcy.

    NEW YORK (AP) -- CIT Group Inc. shares plunged in premarket trading Wednesday as the commercial lender is reportedly trying to craft an exchange that would cut its debt and offer bondholders an equity stake in the company in a bid to avoid bankruptcy.

    Shares of the New York-based financial firm, one of the largest U.S. lenders to small and midsize businesses, fell 95 cents, or 43 percent, to $1.25 in premarket trading.

    CIT Group is preparing an exchange offer that would eliminate as much as 40 percent of its more than $30 billion in outstanding debt, The Wall Street Journal said, citing anonymous sources. The exchange would hand control of the company over to its bondholders and wipe out common stockholders, according to the report.

    A spokesman for the company declined comment on Wednesday.

    CIT Group spent the summer trying to stave off a potential collapse amid mounting loan losses and rising funding costs. It has been devastated by the downturn in the credit markets and is attempting to restructure its operations to remain in business. CIT in the past relied heavily on cheap, short-term debt to fund its operations -- a type of funding that essentially evaporated during the peak of the credit crisis last year.

    The financial firm, which received $2.3 billion in federal bailout aid last fall, received a $3 billion emergency loan in July from some of its largest bondholders and completed a debt repurchase program in August to help ease its cash crunch. Those measures appear to still be short of saving CIT Group, which has said in the past it would need to continue to reduce its debt burden to survive......

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    More money gone to waste as the Depression continues and more and more companies fail.
     

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