LAKE OSWEGO, Ore., March 2, 2017 /PRNewswire/ -- The Greenbrier
Companies, Inc. (NYSE:GBX) today announced the execution of a
definitive agreement concerning its earlier announced intent to
increase ownership in Amsted-Maxion Equipamentos E Serviços
Ferroviários S.A. ("Greenbrier-Maxion") from 19.5% to 60%. Located
near São Paolo, Brazil,
Greenbrier-Maxion is the leading South American railcar
manufacturer, with over 60% share of new railcar production in
Brazil. Greenbrier-Maxion also offers a range of aftermarket
services including railcar overhaul and refurbishment to address an
aging railcar fleet, with more than 60% of the fleet at 30 years of
age or older.
Greenbrier's $20 million
investment will be used to retire debt at Greenbrier-Maxion thereby
reducing interest payments by $4
million annually. The purchase option dates to
May 2015 when Greenbrier obtained its
initial 19.5% ownership of Greenbrier-Maxion. With the option
exercise, the equity interest of Amsted-Maxion Fundição E
Equipamentos Ferroviários S.A. ("Amsted-Maxion Cruzeiro") will be
reduced from 80.5% to 40%.
Simultaneously with the closing of its investment into
Greenbrier-Maxion, Greenbrier will increase its ownership stake in
Amsted-Maxion Cruzeiro from 19.5% to 24.5% for $3.25 million. Based in Cruzeiro, Brazil, Amsted-Maxion Cruzeiro is a
manufacturer of various castings and components for railcars and
other heavy industrial equipment. Cruzeiro is well-integrated
with the operations of Greenbrier-Maxion and draws on the
experience of Amsted Rail, with whom Greenbrier currently partners
in a U.S.-based castings facility. Amsted Rail is the global
leader in railcar bogie and component systems which includes truck
castings, tapered roller bearings, railway wheels, axles and
braking products. Additionally, Amsted Rail has introduced
its Motion Control™ bogie technology in South America to combine with new wagon
technology from Greenbrier-Maxion. Amsted-Maxion Cruzeiro
also benefits from its affiliation with Iochpe-Maxion, S.A., a
prominent, publicly-held, Brazilian-based global auto parts
supplier, which provides access to customer and supplier
relationships.
Proceeds from Greenbrier's increased ownership in Cruzeiro,
along with loans from the partners, will reduce interest costs by
approximately $3 million per
year. Greenbrier will retain an option to increase its
ownership in Amsted-Maxion Cruzeiro to 29.5% subject to certain
conditions.
With an enhanced ownership position in both companies,
Greenbrier expects to enjoy greater benefits from the expected
economic growth and infrastructure development in Brazil. When completed, Greenbrier's
investments in Greenbrier-Maxion and Amsted-Maxion Cruziero will
improve the capital structure of both companies, positioning each
business for growth.
William A. Furman, Chairman and
CEO of Greenbrier said, "Brazil's
economic, business and political conditions are recovering and
forecasts indicate positive GDP growth in 2017. Greenbrier's
operations in Brazil, and our
relationship with our partners Amsted and Iochpe, continue to yield
positive results. Our facilities, which include the largest railcar
assembly plant in South America,
continue to gain momentum. In two short years we have already
brought innovation to the South American railcar market. We
introduced two new products to Brazil, a new triple hopper grain car and a
modern double stack railcar design, drawing on our North American
heritage as the leader in intermodal railcars. We are expanding our
investments in Brazil to reach
customers who need high quality transportation equipment and in
pursuit of continued growth and further diversification of
Greenbrier's global business into new markets. Our strong
balance sheet enabled us to move quickly and decisively in seizing
this opportunity."
Furman continued, "Our increased ownership allows us to use our
core competency in manufacturing to drive operational efficiencies
in these businesses. As Greenbrier becomes more active in the
operations of both companies, we will evaluate opportunities to
evolve our business model in South
America to emulate our operations in North America where we provide a suite of
diversified aftermarket offerings for railcars such as maintenance,
parts, refurbishment, leasing and management services."
Following the closing of this transaction and the previously
announced Astra Rail transaction in
Europe, Greenbrier will be the
leading railcar builder in South
America and Europe, and the
second largest railcar builder in North
America with the ability to tap markets in all three
continents, as well as reach customers in the nations of the Gulf
Cooperation Council, Africa, and
Eurasia. This global reach extends Greenbrier's leadership in
railcar engineering, design and manufacturing and enables
partnerships with established transportation equipment providers
whose local presence and experience assists Greenbrier's growth in
new regions.
Closing of the investments is contingent on meeting certain
conditions, including the completion of antitrust approval in
Brazil.
About Greenbrier
Greenbrier (www.gbrx.com),
headquartered in Lake Oswego,
Oregon, is a leading international supplier of equipment and
services to freight rail transportation markets. Greenbrier
designs, builds and markets freight railcars in North America and Europe. We also build
and market marine barges in North America. We manufacture
freight railcars and rail castings in Brazil through a strategic partnership.
Through our European manufacturing operations, we recently began
delivery of U.S.-designed tank cars to Saudi Arabia. In October 2016, we entered into an agreement with
Astra Rail Management GmbH to form a new company, Greenbrier-Astra
Rail, which will create an end-to-end, Europe-based freight railcar manufacturing,
engineering and repair business. We expect this combination to be
completed during 2017. We are a leading provider of wheel services,
parts, leasing and other services to the railroad and related
transportation industries in North
America and a supplier of freight railcar repair,
refurbishment and retrofitting services in North America through a joint venture
partnership with Watco Companies, LLC. Through other joint
ventures, we produce rail castings, tank heads and other railcar
components. Greenbrier owns a lease fleet of over 8,500 railcars
and performs management services for over 265,000 railcars.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: This press release may contain
forward-looking statements, including any statements that are not
purely statements of historical fact. Greenbrier uses words such as
"anticipates," "believes," "forecast," "potential," "goal,"
"contemplates," "expects," "intends," "plans," "projects," "hopes,"
"seeks," "estimates," "strategy," "could," "would," "should,"
"likely," "will," "may," "can," "designed to," "future,"
"foreseeable future" and similar expressions to identify
forward-looking statements. These forward-looking statements
are not guarantees of future performance and are subject to certain
risks and uncertainties that could cause actual results to differ
materially from the results contemplated by the forward-looking
statements. Factors that might cause such a difference
include, but are not limited to, reported backlog and awards that
are not indicative of Greenbrier's financial results; uncertainty
or changes in the credit markets and financial services industry;
high levels of indebtedness and compliance with the terms of
Greenbrier's indebtedness; write-downs of goodwill, intangibles and
other assets in future periods; sufficient availability of
borrowing capacity; fluctuations in demand for newly manufactured
railcars or failure to obtain orders as anticipated in developing
forecasts; loss of one or more significant customers; customer
payment defaults or related issues; policies and priorities of the
federal government regarding international trade and
infrastructure; sovereign risk to contracts, exchange rates or
property rights; actual future costs and the availability of
materials and a trained workforce; failure to design or manufacture
new products or technologies or to achieve certification or market
acceptance of new products or technologies; steel or specialty
component price fluctuations and availability and scrap surcharges;
changes in product mix and the mix between segments; labor
disputes, energy shortages or operating difficulties that might
disrupt manufacturing operations or the flow of cargo; production
difficulties and product delivery delays as a result of, among
other matters, costs or inefficiencies associated with expansion,
start-up, or changing of production lines or changes in production
rates, changing technologies, transfer of production between
facilities or non-performance of alliance partners, subcontractors
or suppliers; ability to obtain suitable contracts for the sale of
leased equipment and risks related to car hire and residual values;
integration of current or future acquisitions and establishment of
joint ventures; succession planning; discovery of defects in
railcars or services resulting in increased warranty costs or
litigation; physical damage or product or service liability claims
that exceed Greenbrier's insurance coverage; train derailments or
other accidents or claims that could subject Greenbrier to legal
claims; actions or inactions by various regulatory agencies
including potential environmental remediation obligations or
changing tank car or other rail car or railroad regulation; and
issues arising from investigations of whistleblower complaints; all
as may be discussed in more detail under the headings "Risk
Factors" and "Forward Looking Statements" in Greenbrier's Annual
Report on Form 10-K for the fiscal year ended August 31, 2016 and Greenbrier's Quarterly Report
on Form 10-Q for the fiscal quarter ended November 30, 2016, and Greenbrier's other reports
on file with the Securities and Exchange Commission. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's opinions only as of the date
hereof. Except as otherwise required by law, Greenbrier does
not assume any obligation to update any forward-looking
statements.
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SOURCE The Greenbrier Companies, Inc. (GBX)