CIT to Sell Commercial Aircraft Leasing Unit
October 06 2016 - 6:40PM
Dow Jones News
CIT Group Inc. agreed to sell its commercial aircraft leasing
business to Avolon Holdings Ltd., a deal CIT hailed as an important
step as it focuses on banking.
The companies said the deal is worth $10 billion and includes
the business's operations, forward order commitments, assets of
$11.1 billion and liabilities of $1.7 billion.
CIT shares rose 8.6% to $39.53 after hours.
CIT said the sale "will strengthen our balance sheet, simplify
our business and enable us to return significant capital to our
shareholders."
As a result, CIT said it received a "non-objection" from the
Federal Reserve Bank of New York for an amended capital plan,
subject to the closing of the deal.
CIT embarked on a "dual track" process for the leasing business,
taking steps toward a potential spinoff while also looking for a
buyer.
The lender unveiled a turnaround plan in March calling for it to
focus on domestic banking.
CIT bought OneWest Bank NA's parent company for $3.4 billion
last year. The deal pushed CIT above the threshold of $50 billion
in assets that subjects it to tougher regulation as a systemically
important financial institution, or SIFI.
Avolon is a unit of Bohai Capital Holding Co. Chinese companies
have become more active in the aircraft-leasing sector as China's
airlines report higher traffic. The leasing sector in general is
thriving as more airlines opt for the flexibility of renting
instead of buying planes.
Write to Josh Beckerman at josh.beckerman@wsj.com
(END) Dow Jones Newswires
October 06, 2016 18:25 ET (22:25 GMT)
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