- US$455 million cash purchase
price, representing an implied purchase multiple of approximately
6X estimated calendar year 2015 Adjusted EBITDA
- Transaction is expected to be highly accretive to earnings
per share and free cash flow per share (before synergies)
- Committed financing via new senior secured credit facilities
totaling US$825 million with a four
year maturity. Facilities to fund acquisition and refinance New
Flyer's existing US$257 million
credit facilities
- New Flyer announces 12.9% increase in dividend from
C$0.62 to C$0.70 per share annually with implementation
intended to follow completion of the Transaction
WINNIPEG, Nov. 10, 2015 /CNW/ - (TSX:NFI;
TSX:NFI.DB.U) New Flyer Industries Inc. ("New Flyer" or the
"Company") today announced that it has entered into a definitive
agreement to acquire Motor Coach Industries International, Inc.
("MCI") from an affiliate of KPS Capital Partners, L.P. for cash
consideration of US$455 million
subject to certain purchase price adjustments (the "Transaction").
The completion of the Transaction is subject to customary closing
conditions including U.S. antitrust and Canadian Competition Act
approvals. Management currently expects the Transaction to close by
the end of 2015.
Founded in 1933 in Winnipeg
Manitoba, MCI is North
America's leading motor coach manufacturer and parts and
service supplier with 3 manufacturing facilities and 9 service and
parts distribution centers. As of December
31, 2014, MCI had the largest installed base of motor
coaches in North America with
approximately 28,000 units, nearly twice the installed base of its
nearest competitor. Well known in the industry for best-in-class
quality, reliability, lowest cost of ownership and a robust coach
aftermarket parts and services offering, MCI's business parallels
New Flyer's leading position in the North American heavy-duty
transit bus industry. While there are a few common public
customers, MCI does not compete with New Flyer.
For the nine months ended September 30,
2015 MCI delivered 576 new coaches resulting in new coach
revenue of approximately US$315
million and also generated pre-owned coach and aftermarket
parts and service combined revenue of approximately US$128 million. Total revenue for this period was
approximately US$443 million.
Paul Soubry, New Flyer's
President and Chief Executive Officer commented on the acquisition,
"We are thrilled to combine North
America's #1 brand in heavy duty-transit buses with
North America's #1 brand in motor
coaches. We are very proud of our track record that focuses on
employee engagement, customer satisfaction and shareholder value.
We intend to build on this success with the addition of MCI and
view this complementary business as an important step forward to
diversification and growth in areas where we can leverage our OpEx,
sourcing, manufacturing, parts distribution and service
expertise."
New Flyer's Chairman of the Board, the Honourable Brian Tobin
P.C., O.C., added, "With the successful acquisition and integration
of Orion Parts and NABI, New Flyer has demonstrated that we have
the leadership, expertise, financial performance and capital
structure to complete accretive acquisitions and create real
shareholder value".
The Transaction presents a number of attractive opportunities
for New Flyer, including:
Growth: MCI provides New Flyer with strong positions in
both the North American private and public motor coach markets with
significant scale in the motor coach parts and service
business.
Diversification: The addition of MCI's new and pre-owned
coach business significantly diversifies New Flyer's product
offering and customer base. In addition to various transit
customers, a number of which overlap with New Flyer's existing
customer base, a significant portion of MCI's business is derived
from private customers, including private charter and tour
operators.
Potential Synergies: New Flyer has identified
opportunities for cost synergies and plans to implement its
operational excellence (OpEx), information technologies and
engineering expertise across MCI, similar to what has been
successfully implemented with prior acquisitions.
Collaboration and Sharing of Technology and Best
Practice: The combined entity will employ approximately 4,800
people who share a like-minded commitment to excellence in bus and
coach manufacturing and customer support with over 42,000 transit
buses and 28,000 coaches currently in operation in Canada and the U.S.
Building on Global Relationships: MCI is the exclusive
sales and service organization for Daimler's Setra coaches in
Canada and the U.S. In addition,
New Flyer has a strong relationship with Marcopolo S.A., an almost
20% equity holder, with global expertise in bus and coach design,
sourcing and manufacturing.
The Transaction, including related expenses, will be funded
through new US$825 million senior
secured credit facilities with a four year maturity consisting of a
US$482 million term loan and a
US$343 million revolver. Assuming a
December 31, 2015 closing of the
Transaction, management expects the revolver to have approximately
US$135 million drawn, which would
result in expected pro forma total indebtedness to combined
Adjusted EBITDA (within the meaning of the new senior credit
facilities) of approximately 3.0x at closing. New Flyer has
obtained fully underwritten financing commitments for the new
credit facilities, subject to customary terms and conditions, and
expects to enter into definitive new credit agreements upon the
closing of the Transaction.
Furthermore, the Transaction is expected to be highly accretive
to New Flyer's earnings per share and free cash flow per share,
even before synergies. New Flyer is currently targeting annual
synergies of approximately US$10
million through the rationalization of corporate costs and
deployment of New Flyer's OpEx and sourcing expertise.
Following closing of the Transaction, New Flyer intends to
increase its common share dividend 12.9% from C$0.62 to C$0.70
per share annually and move from a monthly to a quarterly dividend
payment schedule. Further details will be announced following
completion of the Transaction. New Flyer has paid dividends to
shareholders for over 120 consecutive months since the Company's
initial public offering in August
2005.
BMO Capital Markets is acting as exclusive financial advisor and
Torys LLP is acting as primary legal counsel to New Flyer in
connection with the Transaction. The Bank of Nova Scotia and BMO Capital Markets have
provided a fully committed underwriting for the acquisition
financing and are acting as co-lead arrangers and joint book
runners on the new senior credit facilities.
Conference Call and Webcast
Senior management of New Flyer will host a conference call at
2:00 PM (ET) on November 10, 2015. 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://event.on24.com/r.htm?e=1093950&s=1&k=FB3AA6C54C75D0C68B0DE4AD967D268A
During the call, senior management will be referring to a
presentation which will be posted on the New Flyer website at
www.newflyer.com in the Investor Relations section of the Events
and Presentations page.
A replay of the call will be available from 5:00 p.m. (ET) on November
10, 2015 until 11:59 p.m. (ET)
on November 18, 2015. To access the
replay, call 855-859-2056 or 416-849-0833 and then enter pass code
number 79122625. The replay will also be available on New Flyer's
web site at www.newflyer.com.
About New Flyer
New Flyer is the leading manufacturer of heavy-duty transit
buses in the United States and
Canada. The Company is the
industry technology leader and offers the broadest product line of
transit buses including drive systems powered by: clean diesel,
natural gas, diesel-electric hybrid, electric trolley and now,
battery-electric. All buses are supported by an industry-leading
comprehensive warranty and support program, and service network.
New Flyer also operates the industry's most sophisticated
aftermarket parts organization, sourcing parts from hundreds of
different suppliers and providing support for all types of transit
buses.
The New Flyer group of companies employ over 3,300 team members
with manufacturing, fabrication, parts distribution and service
centers in both Canada and
the United States. Over 40,000 New
Flyer, Orion and NABI heavy-duty transit buses are in operation
today. Further information is available on New Flyer's website at
http://www.newflyer.com.
The common shares and convertible unsecured subordinated
debentures of the Company are traded on the Toronto Stock Exchange
under the symbols NFI and NFI.DB.U, respectively.
About MCI
Motor Coach Industries International, Inc. ("MCI") is the
leading manufacturer of intercity coaches in the U.S. and
Canada. MCI builds expertly
engineered, best-selling models for the tour, charter, line-haul,
commuter and transit markets. MCI also offers 24-hour technical
support, industry-leading technician training and the most
extensive aftermarket parts and repair service offering in the
Canada and the U.S. MCI has a
strategic partnership with Daimler in North America, whereby MCI is the exclusive
distributor of Daimler's Setra motor coaches and aftermarket parts
(which management of New Flyer expects will continue following the
completion of the Transaction). MCI operates manufacturing
facilities in Winnipeg, Manitoba
and Pembina, North Dakota and has
parts distribution centers and service centers across Canada and the
United States. MCI employs approximately 1,500 team
members.
Financial Terms and Information
The financial information relating to MCI provided in this press
release is based on or derived from MCI's unaudited financial
statements prepared in accordance with U.S. GAAP.
"Adjusted EBITDA" consists of earnings before interest, income
taxes, depreciation, amortization and other non-cash charges and
certain non-recurring charges as set out in the Company's
management discussion and analysis dated November 4, 2015 ("MD&A") available on SEDAR
at www.sedar.com. The Adjusted EBITDA of MCI described in
this press release has been calculated by management in a similar
manner. Management believes Adjusted EBITDA is a useful measure in
evaluating the performance of the Company and MCI. However,
Adjusted EBITDA is not a recognized earnings measure and does not
have a standardized meaning prescribed by International Financial
Reporting Standards ("IFRS") and may not be comparable to similarly
titled measures used by other issuers. Readers 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 or MCI's performance or as an alternative to cash
flows from operating, investing and financing activities determined
in accordance with IFRS, as a measure of liquidity and cash
flows.
In accordance with IFRS, the Company will consolidate the
revenue, earnings and other financial information of MCI with New
Flyer's financial information in its regularly reported financial
statements.
Forward-Looking Statements
This press release contains forward-looking statements
relating to expected future events, including the completion of the
Transaction and the new credit facilities and the timing thereof,
the availability of funds from the new credit facilities for the
funding of the purchase price and related expenses, MCI's expected
Adjusted EBITDA for 2015, the expected total leverage at closing,
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, the accretive
effects of the transaction to revenue, earnings and cash flow of
New Flyer and the intended increase in the annual amount of
dividends paid by the Company. 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 reflected in such forward-looking statements for a variety of
reasons, including risks related to the satisfaction of the
relevant closing conditions for and the completion of the
Transaction and the new credit facilities (and that the reverse
break fee under the acquisition agreement for the Transaction will
not be triggered), the achievement of MCI's business plan and
budget for the remainder of 2015, working capital and earnings
fluctuations prior to closing, the ability to implement the
operational changes necessary to achieve the intended synergies,
acquisitions, joint ventures and other strategic relationships with
third parties (including liabilities relating thereto), the
covenants contained in the Company's new senior credit facilities
could impact the ability of the Company to fund dividends, 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.