Snap-On Terminates Joint Venture Operating Agreement With CIT

Snap-on Incorporated announced it has notified CIT of termination of the operating agreement between CIT and Snap-on relating to the parties’ Snap-on Credit LLC joint venture, pursuant to Snap-on’s rights to terminate under the agreement.

Snap-on and CIT are partners in Snap-on Credit LLC, which provides a broad range of financial services to Snap-on’s U. S. franchisees and customers. The joint venture was established in 1999 and CIT has been the exclusive purchaser of the financing contracts originated by Snap-on Credit. Snap-on and CIT have been in ongoing discussions concerning a longer term new joint venture agreement.

Both parties have agreed to continue these discussions. To the extent a mutually acceptable agreement can be reached, including CIT resolving its liquidity issues over a longer term, it is possible the parties could, at a later date, enter into a new joint venture agreement.

As a consequence of this termination, Snap-on will acquire CIT’s interest in the joint venture for approximately US$8.2 million, Snap-on Credit will become a wholly owned subsidiary of Snap-on Incorporated, and Snap-on Credit will continue to service the existing portfolio of contracts owned by CIT. The approximate outstanding balance of this portfolio is US$834 million.