CIT Group Inc. (NYSE: CIT) has announced that it is drawing upon its $7.3 Billion in unsecured U.S. bank credit facilities. The Company will use the proceeds to repay debt maturing in 2008, including commercial paper, and to provide financing to its core commercial franchises.
Interestingly enough, the company also notes that will continue to actively seek additional funding sources over the near-term and "it will explore and execute on the sale of non-strategic assets or business lines."
CEO Jeff Peek noted that this was a result of the protracted disruption in the capital markets as well as recent actions taken by the rating agencies. In addition it should provide it with added flexibility and the ability to finance clients. The company will hold a conference call after the close today to discuss the details.
Shares of CIT Group were already down significantly by more than 30% on financing concerns before being halted today. The good news is that the company seems able to tap that credit facility. The bad news is that investors usually treat companies that drain their credit facilities as being in a pickle.
CIT Group has made many disclosures on overall credit exposures, but it has really taken its toll. Over the last year this was a $60.00 stock. Shares were down at $7.94 before the stock was halted at 11:45 AM EST.
Jon C. Ogg
March 20, 2008