Shares of CIT (CIT) rallied 32% to $2.20 after The New York Post reported that hedge-fund operator John Paulson of Paulson & Co. was orchestrating a move to merge CIT Group with the remains of IndyMac Federal Bank.
Those who bought the stock all day long are bound to have a hard morning. CIT has dropped back to $1 on news that it may be turned over to its bondholders.
According to The Wall Street Journal, “CIT is preparing a sweeping exchange offer that would eliminate 30% to 40% of its more than $30 billion in debt outstanding,” The company may have to file for Chapter 11, if the talks with bondholders fail.
Douglas A. McIntyre
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