The Greenbrier Companies, Inc. (NYSE:GBX) today announced the execution of a definitive agreement concerning its earlier announced intent to increase ownership in Amsted-Maxion Equipamentos E Serviços Ferroviários S.A. ("Greenbrier-Maxion") from 19.5% to 60%. Located near São Paolo, Brazil, Greenbrier-Maxion is the leading South American railcar manufacturer, with over 60% share of new railcar production in Brazil. Greenbrier-Maxion also offers a range of aftermarket services including railcar overhaul and refurbishment to address an aging railcar fleet, with more than 60% of the fleet at 30 years of age or older.
Greenbrier's $20 million investment will be used to retire debt at Greenbrier-Maxion thereby reducing interest payments by $4 million annually. The purchase option dates to May 2015 when Greenbrier obtained its initial 19.5% ownership of Greenbrier-Maxion. With the option exercise, the equity interest of Amsted-Maxion Fundição E Equipamentos Ferroviários S.A. ("Amsted-Maxion Cruzeiro") will be reduced from 80.5% to 40%.
Simultaneously with the closing of its investment into Greenbrier-Maxion, Greenbrier will increase its ownership stake in Amsted-Maxion Cruzeiro from 19.5% to 24.5% for $3.25 million. Based in Cruzeiro, Brazil, Amsted-Maxion Cruzeiro is a manufacturer of various castings and components for railcars and other heavy industrial equipment. Cruzeiro is well-integrated with the operations of Greenbrier-Maxion and draws on the experience of Amsted Rail, with whom Greenbrier currently partners in a U.S.-based castings facility. Amsted Rail is the global leader in railcar bogie and component systems which includes truck castings, tapered roller bearings, railway wheels, axles and braking products. Additionally, Amsted Rail has introduced its Motion Control™ bogie technology in South America to combine with new wagon technology from Greenbrier-Maxion. Amsted-Maxion Cruzeiro also benefits from its affiliation with Iochpe-Maxion, S.A., a prominent, publicly-held, Brazilian-based global auto parts supplier, which provides access to customer and supplier relationships.
Proceeds from Greenbrier's increased ownership in Cruzeiro, along with loans from the partners, will reduce interest costs by approximately $3 million per year. Greenbrier will retain an option to increase its ownership in Amsted-Maxion Cruzeiro to 29.5% subject to certain conditions.
With an enhanced ownership position in both companies, Greenbrier expects to enjoy greater benefits from the expected economic growth and infrastructure development in Brazil. When completed, Greenbrier's investments in Greenbrier-Maxion and Amsted-Maxion Cruziero will improve the capital structure of both companies, positioning each business for growth.
Pinheiro Neto has advised Greenbrier do Brasil Participações Ltda. with Fernando Alves Meira (Picture), Arthur Buzatto and Thais Drumond.
Tozzini Freire has advised Amsted-Maxion Equipamentos e Serviços Ferroviários S.A. and Amsted-Maxion Fundição e Equipamentos Ferroviários S.A. with Maria Elisa Gualandi Verri and Alice Sardinha de Azevedo.
Involved fees earner: Maria Elisa Gualandi Verri – Tozzini Freire ; Alice Souza Sardinha de Azevedo – Tozzini Freire ; Fernando Alves Meira – Pinheiro Neto; Arthur Buzatto – Pinheiro Neto;
Law Firms: Tozzini Freire ; Pinheiro Neto;
Clients: Greenbrier Companies, Inc. ; Amsted-Maxion Equipamentos e Servicos Ferroviarios S.A.; Amsted-Maxion Fundição e Equipamentos Ferroviários S.A.;