CIT Group cites progress filling new board slots

AP News
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Posted: Dec 18, 2009 12:19 PM

CIT Group Inc. said Friday it has made progress identifying seven independent directors recommended by bondholders to serve on its board and help guide the lender's restructuring.

In a regulatory filing updating CIT Group's progress since its Dec. 10 exit from bankruptcy protection, the company said it continues to search for a new CEO while trying to fill out its new 13-member board.

New York-based CIT also said its 2010 priorities include reducing expenses through steps including cutting the size of its back-office operations.

CIT, one of the nation's largest lenders to small and mid-sized businesses, swiftly navigated through bankruptcy in just six weeks because its key bondholders had already approved a plan to reorganize the company. The company had been forced into bankruptcy after failing to raise cash to pay off outstanding debt. CIT was also hammered by mounting loan losses as more customers fell behind on repaying loans amid the recession.

One of the key tasks as the company continues to restructure outside bankruptcy is to fill out its management and governance teams. The new board will include the new CEO, five members from the old board and seven independent directors nominated by CIT's debtholders.

Friday's filing said the company has made "significant progress" in identifying those seven, but didn't offer details. The five holdovers from the old board have been identified, CIT said.

CEO Jeffrey Peek said in mid-October that he planned to retire by the end of the year. Friday's filing said a CEO candidate will be selected by the new board.

The filing also said asset values are improving, but also noted that credit trends "continue to weigh on values."

CIT was able to cut its total debt by $10.5 billion by reorganizing in bankruptcy court. It also deferred debt maturities for three years.

Shares of CIT opened at $25.50 on the first day of trading after the company's exit from bankruptcy. Shares rose nearly 14 percent to finish that day at $28.99, but the stock has mostly fallen this week. On Friday, shares rose 66 cents, or about 2.5 percent, to $26.70 in midday trading.