In conjunction with the execution of the Agreement and Plan of Merger for the acquisition of RailAmerica (RailAmerica Acquisition Agreement) on July 23, 2012, GWI entered into an Investment Agreement with Carlyle Partners V, L.P. (Carlyle). Pursuant to the Investment Agreement, GWI agreed to sell a minimum of $350 million in Series A-1 Mandatorily Convertible Preferred Stock, or the Carlyle Convertible, to partially fund the RailAmerica acquisition. The conversion price of the Carlyle Convertible into Class A Common Stock was set at approximately $58.49, which was a 4.5% premium to the market price of GWI’s Class A common stock prior to the announcement of the RailAmerica acquisition. As previously disclosed, for the period between July 23, 2012 and closing of the acquisition, this instrument was accounted for as a contingent forward sale contract resulting in mark-to-market non-cash income or expense based on changes in GWI’s share price, with the cumulative effect represented as an asset or liability included in our consolidated financial results. Over this period GWI’s share price increased 19.4% to $66.86 as of September 30, 2012, and, accordingly, with the acquisition closing on October 1, 2012, the Company recorded a one-time $50.1 million non-cash mark-to-market loss and corresponding liability on the forward sale contract in the third quarter of 2012. Simultaneous with the October 1, 2012 acquisition closing, this liability was reclassified to the Carlyle Convertible to reflect its total fair value, before issuance costs, of $400.1 million (i.e., to reflect the $350 million provided by Carlyle in cash and $50.1 million in stock price appreciation) on GWI’s balance sheet. In addition, GWI incurred $5.8 million of acquisition-related costs in the third quarter of 2012, primarily associated with the RailAmerica acquisition. Also in the third quarter of 2012, GWI recorded $3.0 million in net gains on the sale of assets, primarily associated with the sale of its third-party fueling operation in South Australia.
Genesee & Wyoming Reports Results For The Third Quarter Of 2012
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