By Dow Jones Business News,
December 20, 2013, 08:15:00 PM EDT
(Updates with Tyco confirmation, details)
By Anna Prior
CIT Group Inc. ( CIT ) said Friday it has reached an agreement with former parent Tyco International Ltd. ( TYC ) to
settle a tax dispute.
According to a filing with the Securities and Exchange Commission, CIT agreed to pay Tyco$60 million, which the
commercial lender said will result in a fourth-quarter charge against earnings of $45 million net of reserves.
Tyco, meanwhile, agreed to release all of its rights and claims under the tax agreement, said CIT.
The dispute stemmed from a tax agreement the companies entered into when Tyco spun off CIT in 2002, under which CIT
was to pay Tyco for any savings the lender gained under so-called tax attributes Tyco created while it owned CIT,
according to the lender's regulatory filings.
A Tyco spokeswoman confirmed the settlement in an email, adding that the $60 million will be shared among Tyco, TE
Connectivity and Covidien under the terms of a 2007 tax-sharing agreement. Tyco's portion is 27%, the spokeswoman said.
CIT, led since 2010 by Wall Street veteran John Thain, specializes in making loans to small and midsize businesses for
everything from equipment purchases to acquisitions. It has clawed its way back to profitability since emerging from
Chapter 11 bankruptcy in late 2009.
The company in October it swung to a third-quarter profit, helped by lower expenses and stronger loan volume.
CIT shares ended Friday at $50.74 and were flat in light after-hours trading. Tyco shares, meanwhile, edged down a
penny to $39.60 after hours.
--Michael Calia contributed to this article.
Write to Anna Prior at email@example.com
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