CIT earmarks $1 billion for factoring unit

Clint Engel -- Home Textiles Today, 8/3/2009 12:04:00 PM

New York — CIT Group has earmarked $1 billion of the $3 billion it raised 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.

"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."

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.