CIT announces wrap of exchange offers, generating $1.15 billion in regulatory capital

By Jennifer Chiou

New York, Dec. 24 - CIT Group Inc. announced the completion of its offers to exchange some of its notes, resulting in the generation of about $1.15 billion of regulatory capital in the form of new subordinated notes as well as the payout of $547 million in cash to be paid upon settlement.

Notes eligible for exchange were 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 participated could elect to receive either new notes or a combination of new notes and cash. The offers were subject to proration.

Holders who tendered 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.

CIT said it received tenders from holders of:

• $14.75 million of its 5.4% notes 2012 in the mixed election and $603,000 in the notes election;

• $1.01 billion of its 7.625% notes due 2012 in the mixed election and $5.61 million in the notes election;

• $5.31 million of its 5.4% notes due 2013 in the mixed election and $4.97 million in the notes election;

• $92.14 million of its 5% notes due 2014 in the mixed election and $1.62 million in the notes election;

• $131.87 million of its 5.125% notes due 2014 in the mixed election and $2.18 million in the notes election;

• $96.93 million of its 5% notes due 2015 in the mixed election and $7.08 million in the notes election;

• $135.21 million of its 5.4% notes due 2016 in the mixed election and $459,000 in the notes election;

• $141.08 million of its 5.85% notes due 2016 in the mixed election and $10.13 million in the notes election;

• $243.69 million of its 5.65% notes due 2017 in the mixed election and $14.74 million in the notes election;

• $263.87 million of its 5.8% notes due 2036 in the mixed election; and

• $217.14 million of its 6% notes due 2036 in the mixed election and $12.55 million in the notes election.

On Dec. 17, the company announced that the withdrawal period for the offers expired, noting that less than $30 million of previously tendered notes were withdrawn. The company had added that the withdrawal amount would not have a material affect on the $2.34 billion of notes already tendered.

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

On Dec. 2, the company increased the size of its exchange offer in response to the amount of tenders received during the early delivery period. CIT offered to exchange up to $1.7 billion principal amount of some outstanding notes for up to $550 million in cash and up to $1.15 billion principal amount of newly issued 12% subordinated notes due 2018.

On Nov. 17, the company said it 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.

The company previously 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 planned 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 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 were 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 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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