CIT begins exchange offers for 11 series of notes

By Angela McDaniels

Tacoma, Wash., Nov. 17 - CIT Group Inc. began private offers to exchange up to $1.5 billion of its outstanding notes for up to $350 million in cash and up to $1 billion of newly issued 12% subordinated notes due 2018, according to a company news release.

The company said the exchange offers - as well as an exchange offer for the equity units related to its mandatory convertible senior notes - 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 plans 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.

Notes eligible for exchange are the company's $500 million 5.4% notes 2012, $2 billion 7.625% notes due 2012, $500 million 5.4% notes due 2013, $750 million 5% notes due 2014, $750 million 5.125% notes due 2014, $750 million 5% notes due 2015, $750 million 5.4% notes due 2016, $750 million 5.85% notes due 2016, $750 million 5.65% notes due 2017, $500 million 5.8% notes due 2036 and $500 million 6% notes due 2036.

Holders who participate may elect to receive either new notes or a combination of new notes and cash. The offers will be subject to proration.

Holders who tender by 5 p.m. ET on Dec. 1, the early delivery time, will also receive $50 principal amount of new notes for each $1,000 principal amount of old notes tendered.

The exchange offers will expire at 11:59 p.m. ET on Dec. 15.

The new notes are being offered only in the United States to qualified institutional buyers and outside the United States to non-U.S. persons who are "non-U.S. qualified offerees."

The offers are subject to conditions that include the approval by the Board of Governors of the Federal Reserve System of CIT's application to become a bank holding company and a financial holding company and the U.S. Department of the Treasury's commitment to purchase CIT senior perpetual preferred stock under the Capital Purchase Program.

The New York-based commercial finance company said it cannot assure that it will obtain approval to become a bank holding company or a financial holding company or that any of the investments described above, including the exchange offers, will be completed.

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