Genesee & Wyoming Inc. (GWI) (NYSE: GWR) announced today that its subsidiary, Genesee & Wyoming Australia Pty Ltd (GWA), recently completed the purchase of an intermodal and freight terminal in Alice Springs, Northern Territory, from Asciano Services Pty Ltd (AIO), a subsidiary of Asciano Pty Ltd (ASX: AIO). Pursuant to the agreement, GWA will sell to AIO certain assets in the township of Cook, South Australia, that include a fuel-sales business.
GWA’s purchase of the Alice Springs facility secures ownership of an important long-term asset on the Tarcoola to Darwin rail line that will continue to be used as a primary intermodal terminal serving customers in and around Alice Springs. The township of Cook, which GWA’s corporate predecessor acquired as part of the purchase of Australian National’s freight assets in 1997, is located between Port Augusta and Kalgoorlie on the interstate rail network controlled by Australia’s Commonwealth Government (ARTC).
GWA purchased the Alice Springs intermodal and freight terminal in June 2012 for A$9.0 million (or $9.2 million at the exchange rate on June 30, 2012) plus A$0.5 million (or $0.5 million at the exchange rate on June 30, 2012) tax liability for stamp duty (an Australian asset transfer tax). Previously, GWA had leased the rail yard from AIO.
The sale of the Cook assets and fuel business is expected to close in the third quarter of 2012, following completion of certain conditions to the closing. GWA expects to receive A$4.0 million (or $4.1 million at the exchange rate on June 30, 2012) in pre-tax cash proceeds from the sale and recognize an after-tax book gain of A$1.3 million (or $1.3 million at the exchange rate on June 30, 2012). The fuel-sales revenue from Cook has historically been reported in GWI’s financial statements as “Fuel sales to third parties,” a component of non-freight revenue. In 2011, “Fuel sales to third parties” related to the Cook fuel business totaled $12.2 million of revenue and $11.5 million of expense.
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