By Kenneth Lim
Boston, April 22 - CIT Group Inc. priced a $500 million of perpetual convertible preferred stock on Monday with a dividend of 8.75% and an initial conversion premium of 15%.
The terms were fixed before price talk, market sources said.
The preferreds were sold at par of $50.
There is an over-allotment option for a further $75 million.
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 was a concurrent $1 billion common stock offering priced at $11 per share with a greenshoe for a further $150.15 million. The total amount of the common and preferred stock offerings was originally $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.
| Issuer: | CIT Group Inc.
|
| Issue: | Convertible preferred stock
|
| Bookrunners: | J.P. Morgan Securities Inc., Morgan Stanley & Co. Inc., Lehman Brothers Inc. and Citigroup Global Markets Inc.
|
| Amount: | $500 million
|
| Greenshoe: | $75 million
|
| Maturity: | Perpetual
|
| Dividend: | 8.75%
|
| Price: | Par of $50
|
| Conversion premium: | 15%
|
| Conversion price: | $12.65
|
| Conversion ratio: | 3.9526
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Conversion option: | Issuer may not force conversion before June 20, 2015; thereafter convertible at issuer's option subject to hurdle at 150% of conversion price
|
| Pricing date: | April 21, after the close
|
| Settlement date: | April 25
|
| Distribution: | Registered
|
| Price talk: | 8.75% dividend, up 15%
|
| Stock symbol: | NYSE: CIT
|
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