Dave, I would say that if CIT does not file BK the holders will be reguired to buy the required contracted CIT shares next Nov 2010. I read through most the SEC filing and saw nothing about the Z preferreds. However, it would be interesting to see if there is any mention of the underlying note due Nov 2015. I think owning the Z's here is very risky. I don't see much upside vs the risk that CIT will be able to work this out outside of BK.
CIT Group Inc., 7.75% Equity Units due 11/17/2010
Ticker Symbol: CIT-Z CUSIP: 125581405 Exchange: NYSE
Security Type: Mandatory Convertible Security
SECURITY DESCRIPTION: CIT Group Inc., 7.75% Equity Units, stated amount $25 per unit, initially consisting of Corporate Units which include a stock purchase contract and a 1/40th interest in a 7.50% senior note with a principal amount of $1000. The stock purchase contract requires the holder to purchase for $25 a variable number of shares of CIT Group Inc. (NYSE: CIT) common stock no later than 11/17/2010 and pays a contract adjustment rate of 0.25% per annum. The stock purchase settlement rate will be 0.5952 shares per unit if the then current market price is equal to or greater than $42.00 and 0.7147 shares per unit if the market price is equal to or less than $34.98. For market prices between those values the settlement rate will be $25 divided by the market value. Prior to the IPO of this security, the last reported sale price of the common stock on 10/17/2007 was $34.98 per share. The senior note is due 11/15/2015 and is subject to reset and remarketing on the third business day prior to 11/2/2010.
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