Current CIT (CIT) Common Shareholders Get 2.5% or Nothing

Shares of CIT (NYSE: CIT) are up 27% this morning on news of a restructuring and exchange offer. What does this mean for current common stock shareholders? Below are some important fact that shareholders or speculators should note. If the exchange offer is approved the current common shareholders will retain 2.5% of our common stock. If CIT files the prepackaged bankruptcy, the common is worthless.

If exchange offer is approved by bondholders:
In the event that the conditions to the Offers are satisfied and the Offers are consummated, following the Settlement Date we intend to effect the Recapitalization, including a reclassification of the outstanding shares of our preferred stock, including the New Preferred Stock, into common stock in a manner that, assuming 100% participation in the Offers and approval of the United States Department of Treasury as to the reclassification of its series of preferred stock, will result in holders of our currently outstanding common stock retaining 2.5% of our common stock, holders of our currently outstanding preferred stock receiving approximately 3.5% of our common stock and holders of the New Preferred Stock receiving the remaining approximately 94.0% of our common stock. If we receive the minimum level of participation in the Offers required to satisfy the Liquidity and Leverage Condition and assuming approval from the United States Department of the Treasury as noted above, following consummation of the Recapitalization, holders of the New Preferred Stock will hold 92.5% of the voting power and the equity of the Company, holders of our currently outstanding preferred stock will hold 5% of the voting power and the equity of the Company and holders of our currently outstanding Common Stock will hold 2.5% of the equity and voting power of the Company.

If the Company files the prepackaged bankruptcy:
If the Company files the prepackaged bankruptcy case and the Plan of Reorganization is confirmed, then holders of CIT Group Inc.'s outstanding common and/or preferred stock will have no stake in the reorganized Company. Moreover, holders of equity interests in Delaware Funding will only retain such equity interests if holders of Canadian Senior Note Claims vote in favor of the Plan of Reorganization. There can be no assurance that holders of our equity securities would retain a stake in the Company or receive any value as a result of a bankruptcy case.

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