CIT Group Rebuffs Buffett, Considers Selling Aviation & Rail-Finance Ops

CIT Group (NYSE:CIT) the largest independent lender to small U.S. businesses, has turned down offers from conglomerates Berkshire Hathaway Inc. (NYSE:BRK.A) and Leucadia National Corp. (NYSE:LUK), to buy parts of the company, saying the price was too low, the Wall Street Journal reported Friday, citing sources familiar with the matter.

The company, which is looking at selling off some assets, is most likely to sell its aviation-finance and rail-finance operations, the Journal said, adding that CIT’s analysis is still in early stages. CIT leases airplanes to 100 airlines around the world, and owns 116,000 railcars, which are leased to shippers and railroads.

According to the Journal,  the lender is likely to keep its corporate-finance department, its largest division, and its factoring business, which provides trade finance to retailers and small retail vendors. Less certain is the fate of CIT”s vendor-financing operation –a division that allows companies to finance their customers purchase — which is losing business rapidly. Earlier this week, in another setback for the struggling commercial lender, Microsoft Corp. (NASDAQ:MSFT) said it terminated its vendor-financing relationship with the CIT Group,  saying the lender will continue to service existing loans, but a plan is in place for new customers to receive financing through other vendors.

CIT averted a crisis and bought some time by securing a $3 billion loan facility from a group of its largest bondholders over the weekend, allowing it to avoid bankruptcy for the time being. Despite raising billions in emergency financing, CIT’s future remains uncertain. The lender is trying to restructure its debt out of court, but the lead adviser to some bondholders, notes the Journal, told them on a call Wednesday that a bankruptcy at CIT remains a distinct possibility next month.

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