Execution on Divestiture Plan Continues - Report on General Electric

NEW YORK, September 29, 2015 /PRNewswire/ --

ACI Association has initiated research coverage on General Electric Company (NYSE: GE). Select highlights from the internally released reports are being made available to the general public (included below), with access to the entirety of the research available to new members.

Today, membership is open to readers on a complementary basis at the following URL: http://www.aciassociation.com/GE.pdf  

Highlights from our GE Report include:

• Completion of home loan portfolio sale - The US-based industrial conglomerate, General Electric Company (GE), reported in a press release dated September 16, 2015 that the previously announced sale of its European Sponsor Finance business to Sumitomo Mitsui Banking Corporation Europe (SMBCE) has been completed. The transaction represents an aggregate ending net investment (ENI) of approximately US$2.1 billion. Further, GE also closed the sale of a US$3.7 billion portfolio of loans from its UK home lending business to Kensington Mortgage Company Limited, a company controlled by Blackstone Tactical Opportunities and TPG Special Situation Partners. On year-to-date basis, this means that GE has closed about US$30 billion in previously announced GE Capital Real Estate sales. Moreover, considering the UK home lending portfolio, the total for GE Capital 2015 announced sales is approximately US$90 billion.

• GE to sell transportation finance unit to BMO - In another press release dated September 10, 2015, GE made an announcement regarding the sale of transportation finance unit of GE Capital. The Company said that it has reached an agreement to sell its GE Capital, Transportation Finance business in the United States and Canada to BMO Financial Group (BMO). Post-transaction, BMO will be retaining the management team and employees of the business. According to GE, the transaction which represents about US$9 billion of ENI, when completed, is likely to contribute approximately US$0.7 billion of capital to the overall target of approximately US$35 billion of dividends expected to be paid to GE under this plan (subject to regulatory approval). For this transaction, Credit Suisse and Goldman Sachs provided financial assistance, while Shearman & Sterling LLP provided legal advice to GE. The transaction is expected to close in December of 2015.

• Plans to focus on core business by selling non-core assets - The sale transactions of Transportation Finance Business and Home Loan Portfolio were in line with the Company's strategy to create a simpler, more valuable company by reducing the size of its financial businesses through the sale of most GE Capital assets. By doing so, GE is also focusing on continued investment and growth in its world-class industrial businesses. Though GE will retain the financing businesses related directly to its industrial business, the Company along with the Board of Directors believes that present market conditions are favorable to pursue these dispositions.

• Management Views - Commenting on the sale of home loan portfolio and European Sponsor Finance business, Keith Sherin, GE Capital Chairman and CEO, said, "We are pleased to complete the sale of the European Sponsor Finance business to SMBCE. In addition, with the closing of our third loan portfolio sale this year, we have reduced the size of our UK home lending business by nearly 50 percent to less than US$7 billion." Keith also commented on the sale announcement of Transportation Finance Business, saying, "We expect to reach sales agreements for the majority of our U.S. businesses by the end of this year and the sale of our Transportation Finance business, one of our core commercial lending and leasing businesses, gets us closer to that goal."

To find out how this influences our rating on General Electric Company, read the full report in its entirety here: http://www.aciassociation.com/GE.pdf

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