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CIT earmarks $1 billion for factoring unit

Will support clients in furniture, other industries

Clint Engel -- Furniture Today, August 3, 2009

NEW YORK — CIT Group has earmarked $1 billion of the $3 billion it raise d in recent financing for its factoring unit, according to a letter to CIT customers.

The money shores up CIT Trade Finance, one of the struggling lender's strongest business units and the division overseeing the furniture industry's largest factor.

"These funds are in addition to other available funding," CIT Trade Finance President John Daly said in the letter. "We believe we have sufficient liquidity to meet our obligations and our clients' needs while our parent company implements its restructuring plan."

Terry Oelschlaeger, executive vice president and Southeast regional manager for CIT Commercial Services in Charlotte, N.C., again referred questions to spokesman CIT Curt Ritter, who had no immediate comment.

In the letter, Daly said CIT Trade Finance is one of the nation's oldest providers of factoring and financing, and, "Given our visibility and role in the apparel, furniture, housewares and retail industries, we are sensitive to the impact of our parent company's recent financial challenges on our clients and their customers."

He said the $1 billion infusion demonstrated CIT Group's commitment to division and its clients.

"We are actively reaching out to and working with our clients to ensure they continue to access our services needed to run their business. Credit is being checked, invoices are getting collected and funds are being remitted."

CIT Group's troubles came to a boil last month when negotiations on a government rescue broke down and it looked like a bankruptcy filing was on its way. Late last month, however, the company secured $3 billion in emergency financing from some of its largest bondholders.

The lender said in a Securities & Exchange Commission filing that it may still need to file for bankruptcy if a related discounted cash tender offer for maturing debt expires without enough takers this month. Meanwhile, several industry sources have indicated that furniture company customers of CIT are shopping around for other financing options.

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CIT pledges $1 billion to trade finance unit

Aug 10, 2009

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