Genesee & Wyoming Inc. (GWI) (NYSE: GWR) announced today that it has completed the acquisition of RailAmerica, Inc. (RailAmerica) and entered into a new five-year Senior Secured Credit Facility comprised of a $1.875 billion term loan and $425 million revolving credit facility.
Immediately following the closing of the acquisition, control of RailAmerica was placed into a voting trust with R. Lawrence McCaffrey appointed as trustee. The trust will remain in effect until the U.S. Surface Transportation Board (STB) issues its decision on GWI’s application to control RailAmerica and its railroads, which decision could be as early as the fourth quarter of 2012 or as late as the first quarter of 2013. During the period that RailAmerica is held in trust, GWI will account for its ownership under the equity method of accounting. Expected cost savings from the business combination will not be realized until the STB approves GWI’s control of RailAmerica’s railroads.
GWI financed the $1.37 billion cash purchase price for RailAmerica’s shares, the refinancing of $1.23 billion of GWI and RailAmerica’s total outstanding debt prior to the acquisition, as well as transaction and financing related expenses with approximately $1.85 billion of debt from its new five-year Senior Secured Credit Facility, approximately $460 million of cash from its recent public offerings of common stock and tangible equity units and $350 million through a private issuance of mandatorily convertible preferred stock to The Carlyle Group.
GWI owns and operates short line and regional freight railroads and provides railcar switching services in the United States, Australia, Canada, the Netherlands and Belgium. In addition, GWI operates the Tarcoola to Darwin rail line, which links the Port of Darwin with the Australian interstate rail network in South Australia. Operations currently include 66 railroads organized in 10 regions, with more than 7,600 miles of owned and leased track and approximately 1,400 additional miles under track access arrangements. We provide rail service at 23 ports in North America, Australia and Europe and perform contract coal loading and railcar switching for industrial customers.