CIT and GE, selling rail cars, compete for buyers

By Paritosh Bansal and Dan Wilchins

NEW YORK (Reuters) - CIT Group Inc (CIT.N: Quote, Profile, Research, Stock Buzz) and General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) are both looking to sell their rail car leasing businesses, but the auctions are dragging on as they compete for buyers in tight credit markets, according to people familiar with the situation.

CIT, a commercial lender hit hard by the credit crunch, said in April it was looking at options for its rail car leasing business, including a potential sale, a joint venture, or finding a minority partner.

Last month, CIT said it was in the late stages of the process, but sources said it may still be a while before a resolution is reached.

GE, which has been retooling its finance business over the last year, has also put its own unit on the block, meaning that two of the biggest rail car leasing companies are looking to sell their portfolios at the same time, sources said.

Moreover, the field of potential buyers has thinned because financing remains tough to come by, sources said.

"Buyers are scared right now," one source said, referring to the uncertainty over financing.

It could take till the end of the summer for a winning bidder to emerge in one of the auctions, the sources said. But they added that it could even take as long as the end of the year for the picture to clear.

Lease financing company GATX Corp (GMT.N: Quote, Profile, Research, Stock Buzz), which controls one of the largest rail car fleets in the world, is still seen as a contender for CIT's business, one source said.  Continued...