CIT sells $1.5 billion of stock

NEW YORK (Reuters) - CIT Group Inc <CIT.N>, a commercial finance company trying to raise cash amid the global credit crisis, on Tuesday said it sold $1.5 billion of common stock and convertible preferred stock, 50 percent more than planned, in offerings that dilute existing shareholders.

The New York-based company said it sold $1 billion of common stock, comprising 91 million shares at $11 each. It also sold $500 million of preferred stock carrying an 8.75 percent dividend, and convertible into CIT stock at $12.65 per share.

Net proceeds from the offerings total about $1.44 billion, CIT said. The company said it intends to use net proceeds for general corporate purposes, including payment of $8 million of preferred stock dividends this quarter, and $23 million of interest on junior subordinated notes in the third quarter.

CIT said it may increase both offerings 15 percent, potentially increasing gross proceeds to about $1.73 billion.

CIT's shares fell $1.83, or 14.3 percent, to $10.91 in premarket trading.

Like many other finance companies that cannot borrow from the Federal Reserve, CIT has been raising cash to help meet its obligations and fund new business. In March, it said it drew down its $7.3 billion of bank credit lines.

Last week, CIT posted a $257.2 million first-quarter loss, slashed its dividend 60 percent, and said it may sell its railcar leasing business to raise cash.

It also said it has agreed to sell more than $5 billion of assets and loan commitments, and has identified another $2 billion of loan assets it may finance or sell. CIT also said it has enough cash to meet its obligations this year.

Citigroup Global Markets Inc, JPMorgan, Lehman Brothers Inc and Morgan Stanley arranged the stock offerings, CIT said.

(Reporting by Jonathan Stempel; editing by Maureen Bavdek)