CIT Group Inc. shares surged 25% this morning after the commercial-finance company announced plans to sell its home lending business and manufactured-housing portfolio for $1.8 billion in cash and the assumption of debt.
The sales fulfill the company’s plan to exit the troubled residential-mortgage sector and focus solely on commercial finance.
New York-based CIT will sell its home lending business to Lone Star Funds of Dallas for $1.5 billion in cash and the assumption of $4.4 billion in debt and related liabilities.
In a separate transaction, it will sell its manufactured-housing portfolio to Vanderbilt Mortgage and Finance Inc. of Maryville, Tenn., for $300 million.
“These sales complete our exit from all home lending businesses, removing the uncertainty surrounding this asset class, and advances our strategic transformation into a company focused entirely on commercial finance,” Jeffrey Peek, the company’s chairman and chief executive, said in a statement.
The company has been trying to take steps to strengthen its balance sheet and boost its liquidity during the current credit crunch.
Since April, it has raised $1.6 billion in new capital, completed $1.5 billion in asset-backed financings, sold more than $2 billion in assets and retired about $5.3 billion in debt.
CIT shares traded as high as $8.56 a share Tuesday morning, up 25% from Monday’s close of $6.81 a share.
They recently traded at $8.09.
However, this is still far below its 52-week high of $57.97 set in July of 2007.
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