Item 1.01.
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Entry Into a Material Definitive Agreement
.
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Share Sale Agreement
On October 20, 2016, Genesee & Wyoming Inc., a Delaware corporation (
G&W
), GWI Acquisitions Pty Ltd, a newly-established,
wholly-owned subsidiary of G&W (the
Purchaser
), Glencore Coal Pty Limited (the
Seller
), and Glencore Operations Australia Pty Limited (the
Seller Guarantor
), entered into a Share Sale
Agreement (
SSA
) pursuant to which the Purchaser agreed to acquire 100% of the issued share capital of Glencore Rail (NSW) Pty Limited (
GRail
) for cash consideration of A$1.14 billion (US$866 million at current
exchange rates) (the
GRail Transaction
). G&W has agreed to provide a guaranty in favor of the Seller of the Purchasers obligations under the SSA.
The GRail Transaction is expected to be consummated during the fourth quarter of 2016, contingent upon customary closing conditions, including the receipt of
Australian Foreign Investment Review Board approval. The Seller or the Purchaser may terminate the SSA if the closing conditions are not satisfied on or prior to January 12, 2017 or, if the Purchaser is able to extend the commitment period
under the Debt Commitment Letter (described below), no later than February 28, 2017. The SSA contains customary provisions, including without limitation, post-closing adjustments to the purchase price based on the working capital of GRail at
closing; obligations on the Seller prior to closing to conduct the business of GRail in its ordinary and usual course in accordance with its usual business practices; certain representations and warranties from the Seller for the benefit of the
Purchaser; and certain indemnities from, and rights to bring action against, the Seller for the benefit of the Purchaser for breach of such representations and warranties and certain tax matters, subject to customary limitations and caps.
In connection with the acquisition of GRail, G&W has obtained a commitment for equity financing from a Macquarie Infrastructure and Real Assets consortium
(
MIRA
). Concurrently with the closing of the GRail Transaction, MIRA will contribute A$644 million (US$489 million at current exchange rates) in the form of cash and shareholder loans to G&W Australia Holdings LP, an existing
partnership that is wholly-owned by G&W (the
Partnership Transaction
and together with the GRail Transaction, the
Transactions
). This partnership will be jointly-owned, 51.1% by G&W and 48.9% by MIRA
(the
Partners
), following the closing of the Transactions (the
Partnership
) and will own G&Ws existing Australian business and GRail. Following the Transactions, G&W will consolidate 100% of the
Partnership in its financial statements and will record a noncontrolling interest for MIRAs 48.9% equity ownership. The Partnership will be governed by a management committee, which will contain representatives appointed by both MIRA and
G&W and will be required to report to the general partners on a periodic basis. Certain matters will require approval by both Partners, in general these include: (i) hiring and firing of select executives of the Partnership;
(ii) commitments relating to significant contracts or other matters; (iii) approval of the Partnerships strategic plan, which is a long-term plan outlining the expectations of the partners for the business (including leverage, equity
returns and capitalization); (iv) mergers or consolidations; (v) incurrence of material indebtedness; (vi) capital structure changes; (vii) changes to the distribution policy; and (viii) related party transactions. The
Partners also have agreed to certain customary exit rights with respect to their interests in the Partnership.
Commitment Letter
On October 14, 2016, and in connection with the Purchaser and G&W entering into the SSA, GWI Holdings No.2 Pty Ltd, a wholly-owned subsidiary of
G&W and the direct parent company of the Purchaser, entered into a mandate, commitment and fee letter for debt financing (the
Debt Commitment Letter
) with Australia and New Zealand Banking Group Limited, Bank of America, N.A.
Australian Branch, BNP Paribas, Citibank, N.A. Sydney Branch, Commonwealth Bank of Australia, JPMorgan Chase Bank, N.A., National Australia Bank Limited, Sumitomo Mitsui Banking Corporation and The
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Bank of Tokyo-Mitsubishi UFJ, Ltd. (collectively, the
Lenders
), pursuant to which, subject to the terms and conditions set forth therein, the Lenders have committed to provide
to the Purchaser up to A$690 million (US$524 million at current exchange rates) in senior secured term loan facilities and up to A$50 million (US$38 million at current exchange rates) in the form of a revolving loan facility.
The Lenders and certain of each of their affiliates may have engaged in, and may in the future engage in, investment banking and other commercial dealings in
the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
Credit Agreement Amendment
On October 20, 2016,
G&W entered into Amendment No. 2 (the
Amendment Agreement
) to the Second Amended and Restated Senior Secured Syndicated Facility Agreement, dated as of March 20, 2015, among G&W, RP Acquisition Company Two,
Quebec Gatineau Railway Inc., Genesee & Wyoming Australia Pty Ltd, Rotterdam Rail Feeding B.V., ERS Railways B.V., GWI UK Acquisition Company Limited, Bank of America, N.A., as administrative agent and co-lead arranger and co-bookrunning
manager, J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as co-lead arrangers, co-bookrunning managers and co-syndication agents, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking
Corporation, TD Bank, N.A. and Wells Fargo Bank, National Association, as co-documentation agents, and the lenders and certain guarantors party thereto from time to time (as amended by the Amendment Agreement, the
Credit
Agreement
).
The Amendment Agreement permits, among other things, G&W to enter into the Partnership Transaction and the GRail Transaction
(collectively, the
Australian Reorganization
). The Amendment Agreement also permits the repayment in full and termination of the obligations of the Partnership and its subsidiaries (the
Australian Loan Parties
)
under the Credit Agreement (the
Australian Refinancing
). The Amendment Agreement further amends certain covenants in the Credit Agreement to increase the size of the permitted incremental facilities thereunder to permit the
incurrence of up to $575.0 million of incremental facilities or other indebtedness to backstop the repayments related to the Australian Refinancing and the financing of the Australian Reorganization.
Following the Australian Refinancing and Australian Reorganization, the Australian Loan Parties shall become unrestricted subsidiaries under, shall cease to
be party to and shall have no obligations under, the Credit Agreement.
Certain of the parties to the Amendment Agreement, or their affiliates, have
provided, and may in the future from time to time provide, certain commercial and investment banking, financial advisory and other services in the ordinary course of business for the Company and its affiliates, for which they have in the past and
may in the future receive customary fees and commissions.
The foregoing description of the SSA, the Debt Commitment Letter and the Amendment Agreement
and the transactions contemplated thereby do not purport to be complete and are subject to, and qualified in its entirety by, the full text of the SSA, the Debt Commitment Letter and the Amendment Agreement, copies of each of which are attached
hereto as Exhibits 10.1, 10.2 and 10.3, respectively, which are incorporated herein by reference.
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Cautionary Statement Regarding Forward-Looking Statements
This filing contains forward-looking statements. Statements that are not historical facts, including statements about beliefs or expectations, are
forward-looking statements. These statements are based on plans, estimates and projections at the time G&W makes the statements and readers should not place undue reliance on them. In some cases, readers can identify forward-looking statements
by the use of forward-looking terms such as may, will, should, expect, intend, plan, anticipate, believe, estimate, predict,
potential, or continue or the negative of these terms or other comparable terms. Forward-looking statements involve inherent risks and uncertainties and G&W cautions readers that a number of important factors could cause
actual results to differ materially from those contained in any such forward-looking statement. Factors that could cause actual results to differ materially from those described in this filing include, among others: uncertainties as to whether and
when the Transaction will be consummated; general economic and business conditions; and other factors. Readers are cautioned not to place undue reliance on the forward-looking statements included in this filing, which speak only as of the date
hereof. G&W does not undertake to update any of these statements in light of new information or future events.