CIT Secures Credit, Shares Jump

Stock quotes in this article: CIT , GS , KKR , GE , CSE  

CIT Group(CIT Quote) rallied as much as 15% Monday, after Goldman Sachs(GS Quote) provided a $3 billion line of financing.

The capital infusion will enable CIT Financial, a subsidiary of CIT Group, to finance commercial loans, equipment contracts, FFELP student loans, aircraft or rail leases and even private student loans. CIT will pay Goldman 2.85% and may not include any securities backed by home mortgage loans. It is a 20-year facility, but with a 15-year average weighted life.

"We view this transaction as another important milestone in achieving our desired financing profile," Chairman and CEO Jeffrey Peek said in a company statement.

CIT has spent much of the year shoring up its balance sheet. The company so far has sold $1.4 billion of asset-based loans and raised $1.6 billion through common and preferred stock offerings. It is in the process of selling $500 million worth of aircraft and is also trying to sell its $4.5 billion rail business, which seems to have generated interest among buyers.

The finance firm has $8.1 billion of debt maturities, $1.3 billion of commercial paper outstanding, $2.1 billion of bank lines that must be paid down during 2008 and $1.5 billion in aircraft purchases. But CIT has managed to cut 575 jobs as it addresses its problems head on.

Goldman Sachs analyst James Fotheringham had a neutral rating on the stock and recently lowered his price target to $10 from $13. He also cut his estimates since he didn't see the latest capital raise as a long-term funding solution.

  • Loading Comments...
  •  
< Previous
1 2

SHARE:

  • email
  • print
  • comment
  • digg
  • delicious
  • linkedin




Connect with TheStreet

Dow Jones S&P 500 NASDAQ 10-Year Note
10,373.41 1,105.93 2,191.52 33.31
Oil *
78.50
UP
102.94
UP
12.45
UP
23.64
DOWN
0.98
10 Yr
3.33%
SPDR Gold
111.49
+1.00%
+1.14%
+1.09%
-2.86%
Data delayed 20 minutes

Brokerage Partners

TheStreet Premium Services

All Services