But the company's stock remains well below $1 - and down 54 percent from only a week ago
- suggesting investors still rate its prospects of survival as slim after the federal government refused to rescue the firm.
CIT is in talks with JPMorgan Chase & Co., Goldman Sachs and Morgan Stanley about receiving short-term financing that may help it avoid filing for Chapter 11 protection, a person familiar with the talks told The Associated Press. The person spoke on condition of anonymity because the talks are confidential.
CIT has been scrambling to raise $2 billion to $4 billion after the federal government refused to bail out the company, one of the nation's largest lenders to small and midsize businesses.
Another option under discussion is for the banks to give CIT financing under a Chapter 11 bankruptcy proceeding, according to the source. That would allow the company to restructure under court protection and would ease fears about restricting access to credit for thousands of small retailers, manufacturers and other businesses.
CIT's stock jumped 29 cents to close at 70 cents after rising as high as 93 cents earlier in the day.
"It looks like they're doing everything they can to avoid bankruptcy," said longtime banking analyst Bert Ely.
But there is no guarantee an agreement will be able to save the ailing company, which is teetering on the brink after rescue talks with government regulators broke off late Wednesday after days of round-the-clock negotiations. The New York-based bank faces $7.4 billion in debt due in the first quarter of next year.
Highlighting its woes, CIT was removed from the Standard & Poor's 500 index Friday and replaced with software distributor Red Hat Inc.
CIT, which got $2.3 billion of bailout money in December, had warned that depriving it of more federal aid could imperil about a million corporate borrowers
- from Dunkin' Donuts franchisees to retailer Dillards Inc. But the Obama administration turned down the company's request, showing it's drawing a line on federal rescues for troubled financial firms.
CIT bondholders had discussed their options Thursday in a conference call that involved restructuring firm Houlihan Lokey.
If CIT can improve its liquidity, either through debt restructuring or by getting an injection of private equity, that could give it better leverage to reopen talks with regulators. The most likely avenue for survival would be getting permission to transfer assets to the company's bank. The bank could then borrow against that money at a discount if the Fed allows it.
Such transfers require approval from the Federal Reserve and the Federal Deposit Insurance Corp. because regulators don't want banks
- whose deposits are insured - to risk insolvency by bailing out their parent companies.
