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CIT Group, Inc.
Type Public (NYSECIT)
Fate Chapter 11 bankruptcy
Founded 1908
Founder(s) Henry Ittleson
Headquarters New York City
 United States
Key people Jeffrey M. Peek (Chairman, CEO)
Industry Financial services
Revenue US$ 6.09 billion (2008)[1]
Operating income US$ 1.96 billion (2008)
Net income US$ -2.79 billion (2008)
Total assets US$ 80.44 billion (2008)
Total equity US$ 8.12 billion (2008)
Website cit.com

CIT Group, Inc. is a large American commercial and consumer finance company, founded in 1908. The company filed for Chapter 11 bankruptcy in 2009. The company is included in the Fortune 500 and is a leading participant in vendor financing, factoring, equipment and transportation financing, Small Business Administration loans, and asset-based lending. The company does business with more than 80% of the Fortune 1000, and lends to a million small and medium businesses.[2] It was a part of the S&P 500 Index, was replaced by Red Hat at the close of trading July 24, 2009.[3]

The company has its headquarters in New York City, and employs more than 7,300 people in locations throughout North America, Europe, Latin America, and Asia Pacific. The company's name is an abbreviation of an early corporate name, Commercial Investment Trust.

In 2008, CIT Group became a bank holding company in order to qualify for, and ultimately receive $2.3 billion in Troubled Asset Relief Program (TARP) funds. It declared Chapter 11 bankruptcy on 1 November 2009, and with the consent of its bondholders proposed to quickly emerge from bankruptcy court proceedings.

Contents

Structure

CIT's Commercial Finance business offers secured lending, leasing and factoring products including direct loans and leases, operating leases, leveraged and single investor leases, secured revolving lines of credit and term loans, credit protection, accounts receivable collection, import and export financing, debtor-in-possession and turnaround financing, and acquisition and expansion financing. Commercial Finance also offers investment banking advisory services.

CIT's Specialty Finance business consists of home lending, student loans, vendor financing, small business loans, small/mid ticket product leasing and global insurance services.

History

Entrance to headquarters at 505 Fifth Avenue in New York

On February 11, 1908, Henry Ittleson founded the Commercial Credit and Investment Company in St. Louis, Missouri.[4]

In 1915 it moved to New York City and renamed itself Commercial Investment Trust and went by the initials of C.I.T.[5] It remains in New York City today. By that time, the company provided financing for wholesale suppliers and producers of consumer goods. The company added automobile financing to its product line in 1916, through an agreement with Studebaker, the first of its kind in the auto industry. During World War I, CIT financed the manufacture of 150 submarine chasers. It also added consumer financing of radios through an agreement with Thomas Edison, Inc. During the Roaring 20s following the war, consumer spending rose dramatically and CIT prospered in its consumer appliance, furniture, and automobile financing groups. In 1924, CIT incorporated in Delaware and listed itself on the New York Stock Exchange. CIT entered the field of factoring in 1928 and expanded operations into Europe in 1929.

With international tensions rising prior to World War II, CIT closed its German operations in 1934. Arthur O. Dietz succeeded Ittleson as president of the company in 1939. During the war, CIT offered its 2000 employees a month's bonus, life insurance, and a guaranteed job on return if they served in the armed forces. From 1947 to 1950, the company's net income rose from $7.3 million to $30.8 million — $273 million in recent terms. Ittleson died at age 77 on October 27, 1948.[4]

The company moved into a new building at 650 Madison Avenue in Manhattan in 1957. In 1960, Walter Lundell succeeded Dietz as president of the company. Five years later, in 1959, the company passed $100 billion ($1 trillion in recent terms) in financing volume since its founding. The Vietnam War racial turmoil of the 1960s resulted in CIT making changes to its business. In 1969, CIT entered the personal and home equity loan and leasing business and left auto financing. In 1979, restrictive banking rules forced CIT to sell its bank, National Bank of North America. CIT was acquired by RCA Corporation in 1980. RCA promptly sold CIT's four manufacturing businesses: Picker, Gibson, All-Steel, and RACO. The Madison Avenue building was sold in 1982 as the company moved to a newly-constructued headquarters facility in Livingston, New Jersey in 1983. The address of the new headquarters was 650 CIT Drive, after the old 650 Madison Avenue address.

In 1984, CIT was sold to Manufacturers Hanover Trust. In 1989, Manufacturers Hanover Trust sold sixty percent of CIT to Dai-Ichi Kangyo Bank of Japan. As Dai-Ichi Kangyo Bank ran into troubles within its core operations, it sold off non-core assets, including CIT, which in 1997 was carved out as a separate company and re-listed on the New York Stock Exchange.

In 1999, CIT acquired Toronto-based Newcourt Credit Group Inc. for approximately US$4 billion to create one of the largest publicly-owned leasing companies. CIT over-paid for Newcourt, and merger integration troubles forced CIT to draw upon emergency credit facilities with several banks to avoid bankruptcy. As other funding sources dried up, CIT was forced to sell itself to Tyco International Ltd. in June 2001. CIT became the principal operating subsidiary of Tyco's Tyco Capital business.[6] CIT's Livingston address was changed to 1 Tyco Drive.

Tyco ran into its own operating troubles and sold or spun-off non-core opeerations, including CIT. On July 8, 2002 Tyco completed its divestment of its Tyco Capital business through an initial public offering IPO, via the sale of 100% of the common shares in CIT Group Inc. As an independent public company, CIT changed its Livingston address to 1 CIT Drive from 1 Tyco Drive.

CIT moved its global headquarters back to New York City, opening a brand-new headquarters in 2006 across from the New York Public Library.[7] Its headquarters were last in New York city in 1983. CIT retained its Livingston campus as its corporate headquarters.[8]

On July 1, 2008, CIT Group announced that it will be selling its home lending division to Lone Star Funds for $1.5 billion in cash in addition to the $4.4 billion in debt the company currently holds. CIT will concentrate on its commercial pursuits due to the decline in housing and mortgage markets of the past year. They also plan to sell their manufactured housing portfolio Vanderbilt Mortgage and Finance Inc. for approximately $300 million, although it holds a value of $470 million.[9]

In 2008, CIT Group became a bank holding company in order to qualify for, and ultimately receive $2.3 billion in Troubled Asset Relief Program (TARP) funds.[10]

On July 13, 2009, Bloomberg TV reported that CIT was asking for FDIC loan guarantees.

On July 15, the common stock of CIT was halted on the NYSE during trading hours with "News Pending". At 6:03 p.m. a press release was issued on the company's website stating that talks of a government bailout was unlikely. The company had been advised that "no appreciable likelihood of additional government support being provided over the near term." CIT announced that it believed it was unlikely that it would receive further funding from the federal government, and CIT Group came very close to declaring bankruptcy.[11][12][13] It was rescued in a US$3 billion deal on 19 July 2009, via an agreement with the bondholders group, which included Pacific Investment Management Company (PIMCO) and some other top CIT holders.[14]

On July 20, 2009, CIT Group escaped bankruptcy by securing a $3 billion loan from bondholders, and said it plans a comprehensive restructuring of its liabilities.[15]

On September 30, 2009, in its continuing struggle to avoid banktruptcy, CIT Group was reported to be in negotiations with Citigroup Inc., Barclays Capital, and its bondholders to secure rescue financing to comply with its filing to find a plan “acceptable” to the majority of a bondholder steering committee that provided it with the emergency cash by Oct. 1.[16]

On Sunday, 1 November 2009, CIT Group filed for Chapter 11 bankruptcy protection.[17][18 ][19] It filed in the United States Bankruptcy Court for the Southern District of New York along with CIT Group Funding Company of Delaware LLC.[20]

On December 10, 2009, CIT satisfied all of the conditions required to consummate the prepackaged Plan of Reorganization (the "Plan"). The distribution of CIT's new debt and equity securities has taken place in accordance with the Company's confirmed Plan and the new common stock has commenced trading on the New York Stock Exchange (NYSE) under the symbol "CIT." All previously issued and outstanding common stock and preferred stock has been cancelled and extinguished. If you were a holder of CIT common stock (ticker CITGQ.PK) prior to December 10, 2009, you did not receive any distributions under the Plan. Those shares have been cancelled, are no longer traded, and are null, void and worthless. [21]

Board of Directors

As of 2007, members of CIT's Board of Directors were:[22]

References

  1. ^ CIT - CIT Group Inc. - Google Finance
  2. ^ CIT Says It Won’t Get More U.S. Aid
  3. ^ Red Hat to join S&P 500
  4. ^ a b The CIT Story, accessed September 8, 2007
  5. ^ [http://www.scripophily.net/citfincor.html C.I.T. Financial Corporation 1967 - (CIT Group) - scripophily.net - Retrieved March 20, 2008]
  6. ^ 2004 Annual Report, Tyco International Ltd.
  7. ^ CIT Establishes New York City As Its Global Headquarters.PR NewsWire, June 8, 2005.
  8. ^ Contact CIT - US & Global Financial Services accessed on March 25, 2009.
  9. ^ ""CIT Group exits home lending businesses"". Associated Press. 2008-07-01. http://www.chicagotribune.com/business/sns-ap-cit-group-home-lending,0,4343039.story. Retrieved 2008-07-01.  
  10. ^ ""FDIC Said to Withhold CIT Debt Guarantees Due to Risk"". Bloomberg. 2009-07-10. http://www.bloomberg.com/apps/news?pid=20601109&sid=asP1YqNM.d2g. Retrieved 2009-07-13.  
  11. ^ "CIT Group Inc., Major Small Business Lender Seeks Government Aid". ABC News. 2009-07-15. http://abcnews.go.com/Business/SmallBiz/story?id=8088330&page=1. Retrieved 2009-07-15.  
  12. ^ Washington Post on July 16, 2009
  13. ^ CIT Group’s Banks Said to Weigh Bankruptcy Financing (Update1)
  14. ^ CIT clinches deal to stave off bankruptcy (Reuters)
  15. ^ ""CIT gets $3 bln lifeline from bondholders"". Reuters. 2009-07-20. http://www.reuters.com/article/ousiv/idUSN1444850020090721. Retrieved 2008-07-20.  
  16. ^ Pierre Paulden and Kristen Haunss (2009-09-30). "CIT Said to Consider Loan Financing From Citigroup, Barclays". Bloomberg News. http://www.bloomberg.com/apps/news?pid=20601087&sid=afQgXcoYl9rE. Retrieved 2009-09-30.  
  17. ^ "CIT files for Chapter 11 bankruptcy protection". Associated Press. 2009-11-01. http://customwire.ap.org/dynamic/stories/U/US_CIT_GROUP_BANKRUPTCY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2009-11-01-15-59-19. Retrieved 2009-11-01.  
  18. ^ de la Merced, Michael J. (November 1, 2009). "CIT Files for Bankruptcy". New York Times. http://dealbook.blogs.nytimes.com/2009/11/01/cit-to-file-for-bankruptcy-soon. Retrieved 2009-11-01.  
  19. ^ "Commercial lending giant CIT files bankruptcy: Government to likely lose $2.3 billion it spent to prop company up last year". MSNBC. November 1, 2009. http://www.msnbc.msn.com/id/33576310/ns/business-us_business/. Retrieved 2009-11-01.  
  20. ^ "CIT Group Inc., et al.". Kurtzman Carson Consultants LLC. http://www.kccllc.net/citgroup. Retrieved 2009-11-02.   Requires JavaScript.
  21. ^ CIT Group Inc. (2009-12-10). "CIT Shares Commence Trading on New York Stock Exchange". CIT Group Inc.. http://ir.cit.com/phoenix.zhtml?c=99314&p=irol-newsArticle&ID=1364558&highlight=. Retrieved 2009-12-10.  
  22. ^ CIT Corporate Governance. Retrieved on 2007-01-25.
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