CIT Expands Loan Portfolio

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On Wednesday CIT Group Inc. (CIT) extended $61.8 million senior secured credit facility to a portfolio company of Alterna Capital Partners. The latter will utilize the loan to finance the acquisition of three 50,000 DWT ECO-design Medium Range (MR) IMO II/III product/chemical tankers from STX Offshore & Shipbuilding Co. Ltd.

The transaction was financed by CIT’s U.S. commercial bank subsidiary, CIT Bank while CIT Maritime Finance – a segment of CIT specializing in blue water vessel financing – planned and executed it.

The terms and conditions of the transaction are yet to be disclosed but it is known that the deal is to close within the next five years. Further, Alterna has entered into a long-term charter with Stena Weco, a leading shipper of petroleum products, edible oils and easy chemicals for the proposed acquisition of the three tankers.

The latest transaction is CIT’s third deal with Alterna. Earlier, the former had partially financed the construction expenses and delivered cost of American Phoenix, a U.S.-flagged Jones Act-qualified chemical tanker. The tanker is owned by Mid Ocean Tanker Company (:MOTC), a joint venture between Mid Ocean Marine and Alterna Capital Partners.

Further, the latest deal will help CIT expand its loan portfolio in the maritime sector. Notably, as of Jun 30, 2013, CIT’s cash and short-term investment securities were $6.9 billion, comprising $5.7 billion of cash and $1.2 billion of short-term investments.

Currently, CIT carries a Zacks Rank #3 (Hold). Some better performing stocks in the same sector include FleetCor Technologies, Inc. (FLT), Financial Engines, Inc. (FNGN) and Moody's Corporation (MCO). While FleetCor has a Zacks Rank #1 (Strong Buy), both Financial Engines and Moody’s carry a Zacks Rank #2 (Buy).

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