CIT Adopts Tax Plan, Shares Soar

CIT enters into a tax plan and agreement with N.Y. Fed, sending shares up more than 16% in morning trading.
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NEW YORK (

TheStreet

) -- Troubled lender

CIT

(CIT) - Get Report

announced on Thursday that it adopted a tax benefits preservation plan that will protect its ability to use net losses and other taxes.

The news boosted shares of CIT 16% to $1.49 this morning.

The plan discourages one person or group from acquiring a 5% or more stake in the company, which could result in the loss of its tax assets. The plan does not limit the company's ability to pursue restructuring or additional strategic opportunities, CIT said.

Additionally, CIT said that it has entered into a written agreement with the Federal Reserve Bank of New York, which requires regular reporting to the Fed, as well as "certain restrictions related to corporate governance, credit practices, capital and liquidity and the company's businesses." The agreement also requires the regulator to provide written approval of any dividends, distributions, stock purchases or taking on of debt by CIT.

CIT, which lends to many small and mid-size businesses, has been facing a liquidity crisis and attempting to stave off bankruptcy. In July the company received an emergency $3 billion loan from bondholders.

-- Reported by Jeanine Poggi in New York.

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