- $80 million cash purchase
price. The transaction is expected to be immediately
accretive (before synergies) to earnings per share and cash flow
per share.
- Acquisition includes US-based bus manufacturing operations
and service center, and the aftermarket parts distribution
business. Seller to retain NABI's discontinued Hungarian
operations, including substantially all related assets and
liabilities.
- Transaction financing consists of approximately C$65 million from the final tranche of the
previously announced Marcopolo S.A. strategic equity investment in
New Flyer with the balance drawn from New Flyer's newly-amended
senior credit facility (the maturity of which has concurrently been
extended to April 24, 2017).
- New Flyer maintains conservative balance sheet with pro
forma total leverage ratio decreasing to 2.2x (total indebtedness
to Adjusted EBITDA, as defined in the credit agreement).
WINNIPEG,
June 21, 2013 /CNW/ - (TSX:NFI;
TSX:NFI.DB.U) New Flyer Industries Inc. ("New Flyer" or the
"Company") today announced the acquisition of North American Bus
Industries, Inc. ("NABI") from an affiliate of Cerberus Capital
Management, L.P. for cash consideration of approximately
$80 million, virtually all for the
satisfaction of affiliate debt. The acquisition excludes
discontinued operations in Hungary
and substantially all related assets and liabilities. NABI was
founded in 1992, and was known prior to October 1996 as American Ikarus. The completion
of the acquisition and related financing transactions is subject
only to confirmation of the required wire transfers of funds which
is expected later today.
With bus manufacturing operations in
Anniston, AL, a parts distribution
center in Delaware, OH, and a
service center in Jurupa Valley, CA, NABI is an innovative
manufacturer of urban transit buses for U.S. customers. NABI also
operates one of the transit industry's most sophisticated
aftermarket parts organizations, sourcing parts from over 200
different suppliers and providing support for transit buses
throughout North America. For the
last twelve months ended March 31,
2013 NABI delivered 582 bus equivalent units ("EUs") with
bus revenue of approximately $268
million, aftermarket parts revenue of approximately
$60 million, and a combined Adjusted
EBITDA of approximately $20 million.
NABI currently has a total backlog of 1,579 EUs of which 593
are firm and 986 are options.
New Flyer's Chairman of the Board, the
Honourable Brian Tobin, P.C. O.C. commented, "The acquisition of
NABI marks an important milestone for New Flyer and is consistent
with the Company's strategic plan to ensure market and technology
leadership, while providing public transit operators with long-term
stability and excellence in product support. We have been able to
proceed with this transaction while maintaining a flexible and
conservative approach to our balance sheet."
New Flyer's President and Chief Executive
Officer, Paul Soubry explained
further, "NABI represents a compelling growth platform for
us. The addition of NABI to the New Flyer family provides New
Flyer with a highly complementary product line, access to new
customers, a cost efficient manufacturing platform based in
Alabama, and it creates a
significant player in aftermarket parts. The Company plans to
operate the NABI bus and NABI parts operations under the names NABI
Bus, LLC and NABI Parts, LLC, respectively, within the New Flyer
group of companies."
Jim Marcotuli, NABI's President and Chief
Executive Officer, added "New Flyer is a world-class company and
this acquisition will provide NABI with synergistic opportunities
to achieve an even higher level of performance and success. The
combined entity will be positioned to provide customers with an
enhanced product offering and superior customer service."
"This transaction is mutually beneficial for
both New Flyer's and NABI's customers and will provide both
companies with access to new resources and customers that will
serve as catalysts for future growth," said Dev Kapadia, a Cerberus
Managing Director. "We are proud of the operational turnaround that
occurred since we acquired NABI in 2006 under the leadership of
President and CEO Jim Marcotuli, and
with capital resources and extensive operating expertise from
Cerberus."
The transaction presents a number of attractive opportunities
for New Flyer, including:
i) |
|
Enhanced Transit Bus Product Offering: The addition of
NABI's low floor (LFW) and bus rapid transit (BRT) product
platforms complements New Flyer's XcelsiorTM and
MiDiTM product platforms enhancing the Company's ability
to provide customers with the best bus for their application or
environment. In addition, NABI offers buses incorporating stainless
steel frames for customers who have a specific requirement for this
feature. There is little overlap in customers for whom the two
companies are currently building buses. |
|
|
|
ii) |
|
Expanded Parts Business with Improved Offering and Customer
Support: The addition of NABI's aftermarket parts segment
represents a significant step for New Flyer's aftermarket parts
business. New Flyer intends to synchronize the parts databases and
cross-reference lists of New Flyer, Orion and NABI, which
management anticipates will permit the Company to source parts more
efficiently and offer expanded supply chain solutions to
customers. |
|
|
|
iii) |
|
Synergy Opportunities: New Flyer has identified
opportunities for cost synergies such as in the areas of purchasing
and strategic sourcing, plus general and administrative expenses
that are expected to improve competiveness. |
|
|
|
iv) |
|
Collaboration and Sharing of Technology and Best
Practices: The combined entity will employ over 3,000 people
who share a like-minded commitment to excellence in heavy-duty
transit buses and product support with over 40,000 buses currently
in operation in Canada and the US. |
The transaction, including related expenses, is
being funded using approximately C$65
million in proceeds from the issuance of the second and
final tranche of the previously announced strategic equity
investment in New Flyer by Marcopolo S.A.
An additional $20 million is
being drawn from the Company's renewed senior secured credit
facility. On a pro forma basis, New Flyer's Total Leverage Ratio
(total indebtedness to Adjusted EBITDA, as defined in the credit
agreement) would decrease to approximately 2.2x as at March 31, 2013. Furthermore, the transaction is
expected to be immediately accretive to New Flyer's earnings per
share and cash flow per share.
In April of 2013, NABI entered into a settlement
agreement with a customer which provides for an aggregate payment
obligation of $9.25 million over
three years, of which $6.25 million
remains to be paid by NABI. In addition, NABI is required to
contribute an additional aggregate amount of at least $5 million over the next five years in the form
of parts and services rebates (or cash in lieu thereof). NABI's
obligations under the settlement agreement will remain in place
following the acquisition.
As noted above, the second and final tranche of
Marcopolo S.A.'s strategic equity investment in New Flyer is being
completed concurrently with the acquisition. New Flyer is issuing
an additional 6,162,304 common shares to Marcopolo S.A. at a price
of C$10.50 per share for gross
proceeds of approximately C$65
million. Marcopolo S.A. will hold approximately 19.99% of
the Company's issued and outstanding common shares.
Also concurrent with the acquisition of NABI,
the Company completed the amendment and extension of its senior
secured credit facility to April 24,
2017 while increasing the total amount of the facilities to
$257 million, an increase of
$45 million. The borrowing limit of
the revolving facility has been increased to $115 million from $90
million to support working capital fluctuations. The
borrowing limit of the term facility has been increased to
$142 million from $122 million. In addition, certain financial
covenants and definitions have been adjusted to reflect the
acquisition of NABI. The credit agreement also maintains an
accordion feature of $75 million for
future investment or acquisition opportunities.
BMO Capital Markets is acting as exclusive
financial advisor to New Flyer in connection with the acquisition
of NABI. Torys LLP is acting as primary legal counsel to New Flyer
in connection with the transaction. The Bank of Nova Scotia and Bank of Montreal acted as co-lead arrangers and
joint-bookrunners on the senior credit facility extension.
Senior management of New Flyer will host a
conference call at 9:00 AM (ET) on
Monday, June 24, 2013. The call-in
number for listeners is 888-231-8191 or 647-427-7450. A live audio
feed of the call will also be available at
http://www.newswire.ca/en/webcast/detail/1182391/1295533.
During the call, senior management will be referring to a
presentation which will be posted on the New Flyer website later
this morning at www.newflyer.com in the Investor Relations section
of the Events and Presentations page.
A replay of the call will be available from
12:00 p.m. (ET) on June 24, 2013 until 11:59
p.m. (ET) on July 1,
2013. To access the replay, call 855-859-2056 or
416-849-0833 and then enter pass code number 95678601. The replay
will also be available on New Flyer's web site at
www.newflyer.com.
NOTE: All dollar amounts are stated in US currency, unless
otherwise noted.
About New Flyer
New Flyer is a leading manufacturer of heavy-duty transit buses in
Canada and the United States. The Company's three
manufacturing facilities - in Winnipeg,
MB; St. Cloud, MN, and
Crookston, MN - are all ISO 9001,
ISO 14001 and OHSAS 18001 certified. The Company currently operates
a parts fabrication facility in Elkhart,
IN and four parts distribution centers in Winnipeg, MB; Brampton, ON; Erlanger, KY and Fresno, CA. The Company also operates a
service center in Arnprior,
ON.
New Flyer is a market and technology leader,
offering the broadest product line in the industry, including drive
systems powered by clean diesel, natural gas and electric trolley
as well as energy-efficient diesel-electric hybrid vehicles. New
Flyer has delivered over 32,000 heavy-duty buses in Canada and the
United States. All products are supported with an
industry-leading, comprehensive parts and service network. Further
information is available on New Flyer's web site at
www.newflyer.com.
The common shares and convertible unsecured
subordinated debentures of New Flyer are traded on the Toronto
Stock Exchange under the symbols NFI and NFI.DB.U,
respectively.
About North American Bus Industries,
Inc.
North American Bus Industries, Inc. produces a comprehensive line
of innovative, heavy-duty transit buses from 31' to 60'
(articulated) at its headquarters in Anniston, Alabama. North American Bus
Industries prides itself on its environmentally responsible
vehicles with CNG, hybrid-electric and clean diesel propulsion
systems. North American Bus Industries is the market leader with
its sleek and stylish BRT (Bus Rapid Transit) vehicles which offer
cost-effective alternatives to expensive light rail.
About Cerberus Capital Management,
L.P.
Established in 1992, Cerberus Capital Management, L.P. is one of
the world's leading private investment firms. Cerberus has more
than US $20 billion under management
invested in four primary strategies: distressed securities &
assets; control and non-control private equity; commercial
mid-market lending and real estate-related investments. From its
headquarters in New York City and
large network of affiliate and advisory offices in the US,
Europe and Asia, Cerberus has the on-the-ground presence
to invest in multiple sectors, through multiple investment
strategies in countries around the world.
Financial Terms and Information
"Adjusted EBITDA" consists of earnings before interest, income
taxes, depreciation, amortization and other non-cash charges,
adjusted for certain costs related to offerings and certain other
types of non-recurring charges as set out in the Company's
management discussion and analysis dated May
8, 2013 ("MD&A") available on SEDAR at www.sedar.com.
The Adjusted EBITDA of NABI described in this press release has
been calculated by management in accordance with the definition set
out in the MD&A. Management believes Adjusted EBITDA is a
useful measure in evaluating the performance of the Company and
NABI. However, Adjusted EBITDA is not a recognized earnings measure
and does not have a standardized meaning prescribed in accordance
with International Financial Reporting Standards ("IFRS"). Readers
of this press release are cautioned that Adjusted EBITDA should not
be construed as an alternative to net earnings or loss determined
in accordance with IFRS as an indicator of the Company's and/or
NABI's performance.
An equivalent unit or EU represents one 30-foot,
35-foot or 40-foot heavy-duty transit bus and one articulated bus
represents two EUs.
In accordance with IFRS, the Company intends to
consolidate the revenue, earnings and other financial information
of NABI Bus, LLC and NABI Parts, LLC with New Flyer's financial
information in its regularly reported financial statements.
Forward-Looking Statements
This press release may contain forward-looking statements relating
to expected future events, including completion of the required
closing wire transfers, the integration of the acquired business
into New Flyer's existing business and expected synergies, the
diversification and growth of the combined bus and aftermarket
parts businesses and the accretive effects of the transaction to
revenue, earnings and cash flow of New Flyer. Although the
forward-looking statements contained in this press release are
based upon what management believes to be reasonable assumptions,
investors cannot be assured that actual results will be consistent
with these forward-looking statements, and the differences may be
material. Actual results may differ materially from management
expectations as projected in such forward-looking statements for a
variety of reasons, including risks related to acquisitions, joint
ventures and other strategic relationships with third parties,
market and general economic conditions and economic conditions of
and funding availability for customers to purchase buses and to
purchase parts or services, customers may not exercise options to
purchase additional buses, the ability of customers to terminate
contracts for convenience and the other risks and uncertainties
discussed in the materials filed with the Canadian securities
regulatory authorities and available on SEDAR at www.sedar.com. Due
to the potential impact of these factors, the Company disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, unless required by applicable law.
SOURCE New Flyer Industries Inc.