- $10.0 Billion Purchase Price Represents
6.7% Premium to Net Assets
- CIT Intends to Return up to $3.3
Billion of Common Equity to Shareholders and Undertake Certain
Related Liability Management Actions
- Transaction Expected to Close by the
End of the First Quarter of 2017
- Advances CIT’s Strategy to Create a
Leading National Middle-Market Bank
CIT Group Inc. (NYSE:CIT), cit.com, a leading provider of
commercial lending and leasing services, announced today that it
has entered into a definitive agreement to sell CIT Commercial Air,
its commercial aircraft leasing business, to Avolon Holdings
Limited (“Avolon”), the international aircraft leasing company and
a wholly-owned subsidiary of Bohai Capital Holding Co. Ltd. The
transaction is expected to close by the end of the first quarter of
2017, subject to regulatory approvals and customary closing
conditions.
CIT has received a “non-objection” from the Federal Reserve Bank
of New York for its Amended Capital Plan subject to the closing of
the transaction. The Amended Capital Plan authorizes CIT to return
$2.975 billion of common equity to shareholders from the net
proceeds of the sale; return up to an additional $0.325 billion of
common equity contingent upon the issuance of a similar amount of
Tier 1 qualifying preferred stock; and pay common dividends
totaling $64 million per year after the transaction is completed,
subject to quarterly approval by the CIT Board of Directors.
“The sale of CIT Commercial Air represents an important
milestone for CIT and follows an extensive dual-track process that
was designed to maximize shareholder value. This transaction will
strengthen our balance sheet, simplify our business and enable us
to return significant capital to our shareholders,” said Ellen R.
Alemany, Chairwoman and Chief Executive Officer of CIT Group. “We
are making meaningful progress on our strategy to create a leading
national middle-market bank. I want to thank all of our employees,
and in particular those in Commercial Air, whose solid commitment
to building an outstanding franchise over more than 40 years has
enabled the success of this transaction.”
CIT is selling the CIT Commercial Air business to Avolon,
including its operations, forward order commitments, and as of June
30, 2016, certain assets of $11.1 billion and liabilities of $1.7
billion. The Adjusted Net Assets Amount total $9.4 billion which
Avolon is purchasing for a price of $10.0 billion, representing a
premium of 6.7%.
The transaction is subject to receipt of regulatory approvals in
the United States, China and certain other foreign jurisdictions,
the approval of Bohai’s shareholders and the satisfaction of
customary closing conditions. HNA Group, Bohai’s majority
shareholder, has agreed to vote its shares in Bohai in favor of the
transaction. To reflect its commitment to the transaction, Avolon
has deposited $500 million into an escrow account with a U.S. bank
(which will be increased to $600 million during the pendency of the
transaction), which is payable to CIT at closing as part of the
purchase price and in certain circumstances if the transaction is
not consummated.
J.P. Morgan Securities LLC served as exclusive financial advisor
to CIT Group, and Bank of America Merrill Lynch provided capital
markets structuring advice. Wachtell, Lipton, Rosen & Katz
served as legal counsel to CIT Group. Sullivan & Cromwell
provided bank regulatory advice on the Amended Capital Plan.
Conference Call and Webcast
Chairwoman and Chief Executive Officer Ellen Alemany and Chief
Financial Officer Carol Hayles will discuss this transaction on a
conference call and audio webcast today, October 6, 2016 at 5:30
p.m. (EDT). Interested parties may access the conference call live
by dialing 1-888-317-6003 for U.S. callers, 1-866-284-3684 for
Canadian callers or 1-412-317-6061 for international callers and
reference access code “0719302” or access the audio webcast
at cit.com/investor. An audio replay of the call will be
available until 11:59 p.m. (EDT) on November 30, 2016 by dialing
1-877-344-7529 for U.S. callers, 1-855-669-9658 for Canadian
callers or 1-412-317-0088 for international callers with the access
code “10094400”, or at cit.com/investor. A presentation
regarding the transaction is available in the Investor Relations
section of our website at www.cit.com.
Forward-Looking Statements
This press release contains forward-looking statements
within the meaning of applicable federal securities laws that are
based upon our current expectations and assumptions concerning
future events, which are subject to a number of risks and
uncertainties that could cause actual results to differ materially
from those anticipated. The words “expect,” “anticipate,”
“estimate,” “forecast,” “initiative,” “objective,” “plan,” “goal,”
“project,” “outlook,” “priorities,” “target,” “intend,” “evaluate,”
“pursue,” “commence,” “seek,” “may,” “would,” “could,” “should,”
“believe,” “potential,” “continue,” or the negative of any of those
words or similar expressions is intended to identify
forward-looking statements. All statements contained in this press
release, other than statements of historical fact, including
without limitation, statements about our plans, strategies,
prospects and expectations regarding future events and our
financial performance, are forward-looking statements that involve
certain risks and uncertainties. While these statements represent
our current judgment on what the future may hold, and we believe
these judgments are reasonable, these statements are not guarantees
of any events or financial results, and our actual results may
differ materially. Important factors that could cause our actual
results to be materially different from our expectations include,
among others, the risk that (i) Bohai shareholders do not approve
the transaction or that CIT does not receive or satisfy regulatory
or other approvals and conditions on a timely basis or approvals
are subject to conditions that are not anticipated, (ii)
modifications to the terms of the transaction may be required in
order to obtain or satisfy such approvals or conditions, (iii) the
risk that the transaction does not close or that there are changes
in the anticipated timing for closing the transaction, (iv) there
are difficulties, delays or unexpected costs in separating
Commercial Air from CIT or in implementing the transaction, (v)
business disruption during the pendency of or following the
transaction, including diversion of management time, (vi) the risk
that CIT is unsuccessful in implementing its Amended Capital Plan
on the timing and terms contemplated, (vii) the risk that CIT is
unsuccessful in implementing its strategy and business plan, (viii)
the risk that CIT is unable to react to and address key business
and regulatory issues, (ix) the risk that CIT is unable to achieve
the projected revenue growth from its new business initiatives or
the projected expense reductions from efficiency improvements, and
(x) the risk that CIT becomes subject to liquidity constraints and
higher funding costs. We describe these and other risks that
could affect our results in Item 1A, “Risk Factors,” of our latest
Annual Report on Form 10-K for the year ended December 31, 2015,
which was filed with the Securities and Exchange
Commission. Accordingly, you should not place undue reliance
on the forward-looking statements contained in this press release.
These forward-looking statements speak only as of the date on which
the statements were made. CIT undertakes no obligation to update
publicly or otherwise revise any forward-looking statements, except
where expressly required by law.
About Avolon
Headquartered in Ireland, with offices in the United States,
Dubai, Singapore, Hong Kong and Shanghai, Avolon provides aircraft
leasing and lease management services. Avolon is a wholly-owned,
indirect subsidiary of Bohai Capital Holding Co. Ltd., a Chinese
public company listed on the Shenzhen Stock Exchange.
avolon.aero
About CIT
Founded in 1908, CIT (NYSE: CIT) is a financial holding company
with more than $65 billion in assets. Its principal bank
subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender) has
more than $30 billion of deposits and more than $40 billion of
assets. It provides financing, leasing and advisory services
principally to middle market companies across a wide variety of
industries primarily in North America, and equipment financing and
leasing solutions to the transportation sector. 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. cit.com
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version on businesswire.com: http://www.businesswire.com/news/home/20161006006474/en/
CIT MEDIA RELATIONS:Matt Klein, 973-597-2020Director,
Media RelationsMatt.Klein@cit.comorCIT INVESTOR
RELATIONS:Barbara Callahan, 973-740-5058Senior Vice
PresidentBarbara.Callahan@cit.com
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