CIT Group Inc. has completed the sale of NACCO, its European rail leasing business, in two separate transactions: to German-based VTG Aktiengesellschaft (VTG), and to a consortium of WASCOSA AG and a subsidiary of Aves One AG. Net proceeds were $1.1 billion, based on current exchange rates, and included approximately $1.2 billion in assets, which resulted in a modest pre-tax gain, CIT said.
VTG purchased CIT’s operations headquartered in Paris and assets, including approximately 11,000 railcars. The WASCOSA/Aves consortium purchased CIT’s operations and assets in Germany and Luxembourg, including approximately 4,400 railcars.
CIT said a portion of the proceeds will be used “to further optimize CIT’s funding profile, including redeeming the U.S. railcar securitization, 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.”
CIT’s ongoing Rail business includes railcar leasing and equipment financing in the U.S., Canada and Mexico, where the company “has a young and diverse fleet and a leading market position.”
“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 CEO 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 optimize our funding profile and focus on our core strengths in North America.”
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 represented CIT in the NACCO transactions.
Founded in 1908, CIT is a financial holding company with approximately $50 billion in assets as of June 30, 2018. Its principal bank subsidiary, CIT Bank, N.A., has approximately $30 billion of deposits and more than $40 billion of assets. CIT provides financing, leasing, and advisory services principally to middle-market companies and small businesses across a wide variety of industries. It also offers products and services to consumers through its Internet bank franchise and a network of retail branches in Southern California, operating as OneWest Bank, a division of CIT Bank, N.A.