(Reuters) – CIT Group (CIT.N), a commercial finance firm, said on Wednesday it raised $1.15 billion of regulatory capital through a swap of notes, part of a plan to get access to government funding.
CIT said $2.41 billion of old notes were tendered, and it will issue new subordinated notes and give investors $547 million cash.
The company, which earlier this week became a bank holding company, won approval on Tuesday to receive $2.33 billion under the government’s financial bailout program.
The exchange offer was one of the primary components of CIT’s plan to raise regulatory capital to support its application to become a bank holding company.
The new status also would allow CIT to borrow funds directly from the Federal Reserve’s discount window.
Nonbank financial companies have long funded themselves in the stock, bond and bank loan markets rather than relying on deposits. But the credit crunch has made this business model prohibitively expensive, and many are seeking to become banks.
Several commercial finance companies, hit by the financial crisis, have followed this strategy, including GMAC and American Express Co (AXP.N).
CIT shares were off 2 cents at $4.24 in early trade on the New York Stock Exchange. The shares are down 82 percent this year. (Reporting by Juan Lagorio; Editing by John Wallace)