John D. Boyd | Apr 30, 2010 2:36PM EDT
Railcar manufacturer and lessor Greenbrier Companies and investment firm WL Ross said they formed a new entity that bought a 4,000-railcar lease fleet that is valued around $230 million.
The unit, called WL Ross-Greenbrier Rail Holdings, “is owned by affiliates of WL Ross for the purpose of acquiring railcar assets in North America to be managed by Greenbrier,” the companies said. And they may expand its fleet, as the partners said “WLR-GBX intends to seek additional opportunities to acquire railcar lease portfolios utilizing this structure.”
Ross is already a sizable investor in Greenbrier, which builds railcars and barges but also manages lots of cars. Greenbrier directly owns 9,000 railcars for lease, and performs management services for about 226,000 more on behalf of other owners.
This latest equipment deal comes as Greenbrier and other manufacturers face another tough year for new production orders since railroads and shippers still have hundreds of thousands of idled cars across North America despite the recovery under way in freight loadings.
So equipment makers have been diversifying, some by getting more income from repairs or fleet management services and others by spreading into markets overseas or tapping demand for passenger rail products.
“The formation of WLR-GBX and this portfolio acquisition are consistent with our stated strategy to use the WL Ross relationship with Greenbrier as a platform to pursue growth in less cyclical, higher margin, after-market opportunities, said William A. Furman, Greenbrier’s president and CEO.
He said the transaction takes advantage of both firms’ “core competencies” and allows Greenbrier “to participate in significant upside" from managing the additional cars.
Wilbur L. Ross Jr., chairman and CEO of WL Ross, said Greenbrier “is well-positioned for the expected rebound in demand for freight cars, and the long-term growth resulting from rail's fuel efficiency compared with motor freight."
Contact John D. Boyd at jboyd@joc.com.
