CIT to retire $477.6 million equity units in exchange offer

By Susanna Moon

Chicago, Dec. 16 - CIT Group Inc. said investors tendered 19.1 million equity units in its offer to exchange equity units related to its mandatory convertible senior notes for cash and shares of common stock.

The offer for equity units expired at 11:59 p.m. ET on Dec. 15.

The company is expected to retire $477.6 million of equity units, issue 13,654,000 common shares and pay $79.7 million in cash for tendered units.

The exchange is expected to close on Dec. 18.

As previously noted, each equity unit has a par value of $25 and is made up of a purchase contract obligating the holder to buy shares of CIT's common stock and a 2.5% undivided beneficial interest in a 7.5% senior note due Nov. 15, 2015 with a principal amount of $1,000. The current outstanding principal amount of the old notes is $690 million.

CIT offered $4 cash, accrued interest and 0.7147 of a share of CIT common stock for each equity unit.

The company said the exchange offer for the equity units, as well as concurrent private offers to exchange up to $1.5 billion of outstanding notes for cash and new 12% subordinated notes due 2018, are the primary part of CIT's plans to raise roughly $1.4 billion of regulatory capital to support its application to become a bank holding company.

In addition to the exchange offers, CIT intends to raise the remaining amount of required capital through a public or private offering of capital stock that would qualify as tier 1 regulatory capital.

CIT anticipates that this capital-raising plan, in combination with as much as $2.5 billion of tier 1 capital it has applied for through the Capital Purchase Program of the Treasury's Troubled Asset Relief Program, will provide enough capital to exceed the regulatory requirements.

The exchange offer for the units is not subject to a minimum condition or completion of the exchange offer for the company's outstanding notes.

D.F. King & Co., Inc. (800 758-5880 or 212 269-5550) is the exchange agent and information agent.

The issuer is a New York-based commercial finance company.

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