CIT Group Does the Balance Sheet Shuffle

TONS of new common equity - all we need to know now is how many new shares to divide by. Uh....

I'm looking for some value for common shareholders in CIT Group's (CIT) "extra-info" documents filed a few hours ago. Common shares are up 19% or twenty cents in premarket trading, as the company does the "balance-sheet-shuffle." Not to get all crazy on ya, but there may be some common shareholder value left here...Maybe. The balance-sheet shuffle is turning debt holders into new preferred equity holders. The question remains as to what will be left for silly "common" shareholders.

Last night CIT announced that the "debt for something else" swap would proceed, and the race to guess what will be left for common shareholders began. I'm on page 60 and am not sure yet.

Below is a look at the new proposed balance sheet, yet we don't know what the new dilution will be. Bloomberg says 94% of the new "company" will be owned by bondholders. That would leave $670million, or $1.77 per share for current common shareholders. Again, that amount could be quickly wiped out if CIT's assets (loans) take a hit.



Then on page 178 they talk about the new ownership structure some more, suggesting that current common stock owners will own 2.5% of the new common stock -->> based on the new balance sheet figures that would be $282million or 72cents per share. This is a total mess, and as I said yesterday, STAY AWAY!!


Disclosure - No position

Comments

[sarge 907:]

Anyone buying any part of CIT needs a head shrink immediately.

Oct 02 10:14 AM

[User 494946:]

CIT A day traders delight

Oct 02 07:07 PM

[BullnBear:]

In my opinion this was one of the more bizarre stories of the week and it seemed very odd the way this just dropped off from the 09/30 panic to the final details seemingly indicating that everything was suddenly alright.

Oct 03 12:35 AM

[Mudduckk:]

Russian roulette?


On Oct 02 07:07 PM User 494946 wrote:

> CIT A day traders delight

Oct 03 02:01 PM

[rennert:]

Remember WAMU how they let that one fall right into some other greedy Bankers lap. There was money out ther to bail them but the Elite Bullies would not let them. So all the share holders took a loss so the greedy stinking fat cats could gain. But they know if they just call them Communist if they object to being treated like poor trash that will put them back into their place. Shame them tell them how Unamerican they are to object of being treated like crap. The market goes up no matter what the news, the banks are buying eachothers stocks. If they need more money if they have gambling losses they'll get it. We are treated like the Village Idiots in the Middle Ages and they live like the Roman Caesar Nero.If people object just call them Socialists or Communists that will shame them back into their place, were the Elite wants them to be

Oct 03 03:05 PM

[RMG:]

During last few quarters’ conference calls, CIT management has been telling investors that the losses incurred were only one time losses and by the end of the year things are going to turn around and CIT will start making positive earnings. The recent debt to equity swap shows that they want to keep the company and there by their jobs intact and sacrifice the equity holders. There is a pattern here followed by several companies’ management and the federal government. They both treat the share holders as sacrificial lambs or fools to have invested in the companies that have gone bad. There is very little accountability on the part of the management and government.

Oct 03 08:24 PM

[User 407579:]

Wise-up and buy some bonds (or Preferred stocks) instead of common stock


On Oct 03 03:05 PM rennert wrote:

> Remember WAMU how they let that one fall right into some other greedy
> Bankers lap. There was money out ther to bail them but the Elite
> Bullies would not let them. So all the share holders took a loss
> so the greedy stinking fat cats could gain. But they know if they
> just call them Communist if they object to being treated like poor
> trash that will put them back into their place. Shame them tell them
> how Unamerican they are to object of being treated like crap. The
> market goes up no matter what the news, the banks are buying eachothers
> stocks. If they need more money if they have gambling losses they'll
> get it. We are treated like the Village Idiots in the Middle Ages
> and they live like the Roman Caesar Nero.If people object just call
> them Socialists or Communists that will shame them back into their
> place, were the Elite wants them to be

Oct 03 10:45 PM

[Duvanie:]

Bonds? Oh... like GM.


On Oct 03 10:45 PM User 407579 wrote:

> Wise-up and buy some bonds (or Preferred stocks) instead of common
> stock

Oct 04 08:47 PM