CIT shares rise as company emerges from bankruptcy

CIT Group Inc's new shares rose as much as 6 percent from opening levels in their debut on the New York Stock Exchange on Thursday as the lender to small businesses emerged from one of the largest bankruptcies in U.S. history.

CIT, one of the biggest financial sector victims of the credit crisis, is also the only major firm in the sector to emerge from bankruptcy.

Others, such as Lehman Brothers, Washington Mutual and IndyMac have been unable to continue on their own.

But the comeback may not be easy.

In the space they are working, it is a tough time trying to secure customers for a company that has gone bankrupt, said Robert Lutts, president and chief investment officer at Cabot Money Management.

Today, executives making decisions in the financial area are making very low-risk decisions, Lutts said. That means don't work with the problem childs of the world, and I think that is going to mean a tough sledding for CIT.

Hundreds of thousands of small and mid-sized businesses depend on CIT for financing, and company lawyers had said the company needed to get through bankruptcy quickly to avoid customer defections.

CIT's new stock was up 4.20 percent at $28.14 in mid-morning trading after opening at $27.00. The stock rose as much as 6 percent to $28.63.

The more than 100-year-old lender filed for bankruptcy last month after a debt exchange offer failed.

Earlier this week, it won approval from a New York bankruptcy judge for a prepackaged reorganization plan.

CIT's reorganization plan will reduce its debt by about $10.5 billion to about $55 billion and defer significant debt obligations for three years.

Under the plan, holders of CIT's unsecured debt will receive new notes representing 70 cents on the dollar of original debt, plus new common stock.

The company had won support from bondholders for the plan substantially in excess of the minimum amount required under U.S. bankruptcy law.

Common and preferred stockholders, including the U.S. government, will be wiped out.

(Reporting by Juan Lagorio; Editing by Ted Kerr)