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GREENWICH, Conn., Aug. 20, 2002 /PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (Nasdaq: GNWR) announced today that it has signed an agreement to acquire the Utah Railway Company (UTAH), a wholly-owned subsidiary of Mueller Industries, Inc. (NYSE: MLI) for $54 million in cash, subject to working capital adjustments. UTAH operates over 423 miles of track from Ogden, Utah to Grand Junction, Colorado and interchanges with both Union Pacific (NYSE: UNP) and Burlington Northern Santa Fe (NYSE: BNI).
Founded in 1912, UTAH operates over 45 miles of owned track and 378 miles under track access agreements. These trackage rights include agreements with the Union Pacific from Provo, Utah to Grand Junction, Colorado and with BNSF from Provo, Utah to Ogden, Utah. In addition, UTAH serves industrial customers in and around the Salt Lake City area through trackage rights from the Utah Transit Authority. UTAH serves its customers using 23 locomotives. GWI has appointed James N.Davis, currently Vice President-Field Operations of its Rail Link subsidiary, as General Manager to head its new UTAH region.
For the twelve months ended June 30, 2002, UTAH reported approximately $23.7 million of revenue. UTAH serves three principal business segments:
(i), a unit coal train business, primarily shipping low sulfur, high BTU coal to utilities in Utah and Nevada as well as to export and other industrial markets.GWI projects that the UTAH acquisition will be immediately accretive to its earnings per share.
(ii), a switching service for BNSF.
(iii), the Salt Lake City Southern Railroad (SLCS), which serves industrial customers in the Salt Lake City area.GWI initially plans to fund the acquisition under its existing $103 million revolving credit facility. As of June 30, 2002, pro forma for UTAH, GWI's total debt to capitalization is approximately 36.2%. The Company has agreed to purchase the stock of UTAH and its wholly owned subsidiary, the Salt Lake City Southern Railroad, under Section 338 (h)(10) of the U.S. Tax Code and will therefore benefit from the stepped-up tax basis of the UTAH assets. The Boards of Directors of both GWI and Mueller have approved the transaction, which is subject to regulatory approval as well as other customary closing conditions. The acquisition is expected to be completed by the end of the third quarter.
GWI also announced that it has received an underwriting commitment from Fleet National Bank ("Fleet") for $250 million in new senior secured credit facilities (the "Facilities"), subject to customary conditions. Fleet's commitment provides GWI with access to capital for general corporate purposes including additional acquisitions. It is expected that the syndication of the Facilities to a broader group of lenders will commence shortly after the closing of the UTAH acquisition and will be completed approximately 30 days thereafter. Upon completion of the new financing, including the debt incurred to finance UTAH, GWI expects to have approximately $150 million of unused borrowing capacity available under the Facilities.
Mortimer B. Fuller III, Chairman and CEO of GWI, commented, "The Utah Railway has provided 90 years of excellent service to the coal producing region of Utah and has been well operated by its parent company. In recent years it has increased its presence by providing switching for BNSF and by the acquisition of the Salt Lake City Southern Railroad. As our most significant domestic acquisition to date, we believe that under our ownership we will be able to build upon the long history of UTAH and create new opportunities for growth."
GWI has scheduled a conference call for Tuesday, August 20th at 11:00 a.m. Eastern Time to discuss the UTAH acquisition. The dial-in number for the teleconference will be 1-800-288-8967.
GWI is a leading operator of short line and regional freight railroads in the United States, Canada, Mexico, Australia and Bolivia, and provides freight car switching and related services to industrial companies that have extensive railroad facilities within their complexes. The Company operates in five countries on three continents over 8,000 miles of owned and leased track. It also operates over an additional 2,700 miles under track access arrangements.
SOURCE: Genesee & Wyoming Inc.
Last Update 08/21/02
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