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From the August-19, 2009 issue of Credit Union Times Magazine • Subscribe!
CIT Stops Dividends
Small business lender CIT Group Inc. recently announced that it will suspend dividend payments on some of its stock to improve liquidity, preserve capital and thwart bankruptcy.
The suspended dividends are for the company's four series of preferred stock. Payments on the company's equity units are not affected, CIT said. The company has also received the final $1 billion in a $3 billion credit agreement, with a "substantial" amount to be used to support its small business and middle market customers, CIT said in an Aug. 7 statement.
If CIT should file for bankruptcy, smaller mom and pop businesses may have their lines of credit cut off, which could potentially lead them to seek other alternative financing including from credit unions.
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