CIT sells $1 billion of convertibles, common stock; sets perpetual convertible preferreds at 8.75%, up 15%

By Kenneth Lim

Boston, April 21 - CIT Group Inc. priced a series of perpetual convertible preferred stock with a dividend of 8.75% with an initial conversion premium of 15%.

The terms were fixed before price talk, market sources said.

The preferreds were sold at par of $50.

J.P. Morgan Securities Inc., Morgan Stanley & Co. Inc., Lehman Brothers Inc. and Citigroup Global Markets Inc. were the bookrunners of the registered shelf offering.

There is a concurrent common stock offering priced at $11 per share. The total amount of the common and preferred stock offerings is $1 billion.

The preferreds are non-callable for the first seven years, after which they may be called subject to a hurdle at 150% of the conversion price.

The preferreds will have standard dividend and takeover protection.

CIT Group, a New York-based commercial finance company, said it will use the proceeds for general corporate purposes. The proceeds from the common stock offering will pay for about $8 million in dividends on the company's outstanding preferred stock in the second quarter of 2008 and about $23 million in interest due on its outstanding junior subordinated notes in the third quarter of 2008.

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