CIT completes sale of European rail business05/10/2018
CIT Group Inc. (NYSE: "CIT") has announced that it completed the sale of NACCO, its European rail leasing business, for net proceeds of $1.1 billion (approx £840 million) based on current exchange rates. The sale was completed in two separate transactions and included approximately $1.2 billion in assets, which resulted in a modest pre-tax gain.
The operations, headquartered in Paris, and assets, including approximately 11,000 rail cars, were sold to German-based VTG Aktiengesellschaft ("VTG"). On Oct. 1, 2018, the operations and assets in Germany and Luxembourg, which included approximately 4,400 rail cars, were sold to a consortium of buyers consisting of WASCOSA AG and a subsidiary of Aves One AG.
A portion of the proceeds will be used to further optimise CIT's funding profile, including redeeming the U.S. railcar securitisation, terminating the total return swap facility, and repaying additional outstanding unsecured company debt. The balance of the proceeds will be used to return capital to shareholders as part of the previously announced $750 million return of common equity and for general corporate purposes. As a result of these collective actions, CIT expects to fund a greater portion of railcars in its CIT Bank, N.A. subsidiary, which offers a more efficient deposit-based funding structure.
"This marks another step forward on our strategic plan to simplify and strengthen the company as we focus on growing our core businesses," said Chairwoman and Chief Executive Officer Ellen R. Alemany. "With the sale of NACCO completed, we have exited our last ongoing overseas operation, which allowed us to initiate a series of steps to further optimise our funding profile and focus on our core strengths in North America."
For the NACCO transactions, CIT was represented by financial advisors from Credit Agricole CIB and legal counsel from Dechert LLP with a multi-disciplinary team in London, Paris, Munich, Frankfurt, Brussels and Luxembourg.