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CIT: Loss Records of $1.68 Billion

August 18, 2009

According to an article in the Globe & Mail, CIT posted massive losses for the second quarter of 2009, over $1 billion; surprisingly, this is much better than they did this time last year. The article also points to their second quarter 2008 loss of over $2 billion:

Struggling commercial lender CIT Group (CIT-N1.420.064.41%) says it lost $1.68-billion (U.S.) in the second quarter.

Losses mounted as CIT’s borrowing costs exceeded income from lending money to customers. Additionally, CIT set aside money to protect against future losses.

Bloomberg is also covering this development and took the time to re-cap many of the issues plaguing the company at this point:

CIT has been unable to sell corporate bonds in more than a year, and sought a rescue from bondholders after failing to win additional government assistance. The lender has $8 billion in funding needs through June of next year, and will be forced to raise it through asset sales or an extension of its maturing debt, according to yesterday’s filing.

The company secured a $3 billion loan last month from bondholders led by Pacific Investment Management Co. and Centerbridge Partners LP, and began a tender offer. CIT had drawn down the full loan amount by Aug. 4, the firm said.

CIT this month suspended dividends on some series of preferred stock to save about $50 million a quarter, spokesman Curt Ritter said. The lender also adopted a “tax benefits preservation” plan to protect assets that could be lost in the event of a major change in ownership.

The company is also operating under a written agreement with the Federal Reserve requiring it to submit proposals on how it will maintain adequate capital and improve risk management.

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