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CIT Group Shares Up 31% then Down 27% After-Hours

Submitted by WSN_Staff on Tue, 09/29/2009 - 22:10.
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CIT Group Inc. (NYSE:CIT)

CIT Group Inc. (NYSE:CIT) shares went on a tear today up 31% only to fall 27% after-hours, day traders may have been caught in a trap if the company goes Chapter 11.

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.

Chart for CIT Group, Inc. (CIT)CIT shares went to the moon after it was 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. On Friday CIT shares closed at $1.67, today CIT got up to $2.22 then closed at $2.20.  After hours CIT shares lost 27%  and finished trading at $1.60.  

This story is about to go from bad to worse and if the company does go Chapter 11, its all over for existing shareholders.

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