DARIEN, Conn.--(BUSINESS WIRE)--Genesee & Wyoming Inc. (G&W) (NYSE:GWR) announced today that it has signed an agreement with Pinsly Railroad Company of Westfield, Mass., to acquire certain subsidiaries that constitute Pinsly’s Arkansas Division (“Pinsly Arkansas”) for $40 million in cash, subject to adjustment for final working capital. The acquisition is subject to customary closing conditions, including the expiration of the 30-day notice period required by the U.S. Surface Transportation Board for G&W to obtain authority to acquire the Pinsly Arkansas railroads. The transaction is expected to be completed in early January 2015.
Headquartered in Jones Mills, Ark., Pinsly Arkansas includes (i) the Arkansas Midland Railroad (AKMD), which is comprised of seven non-contiguous branch lines; (ii) the Prescott & Northwestern Railroad (PNW); and (iii) the Warren & Saline River Railroad (WSR); as well as (iv) the two Arkansas transload operations of Pinsly’s Railroad Distribution Services subsidiary.
Operations are composed of 137 miles of owned and leased track, 70 employees and 16 locomotives and serve the Hot Springs and Little Rock areas, as well as the southwestern and southeastern portions of the state. [See map link.] The railroads currently haul approximately 35,000 carloads per year and serve a diverse customer base in industries including aluminum, forest products, aggregates, energy and carton board.
Pinsly Arkansas will be managed as part of G&W’s Central Region, which includes six existing short line railroads in the state of Arkansas, under the leadership of Regional Senior Vice President Dewayne Swindall. The acquisition will be funded from G&W’s revolving credit facility and is expected to be immediately accretive to G&W's earnings per share. In 2015, G&W estimates that Pinsly Arkansas will contribute approximately $5.4 million of EBITDA, including certain net cost savings. The entities being sold are subchapter S subsidiaries and as such the tax basis in the companies acquired will be stepped up to the purchase price.
Jack Hellmann, president and chief executive officer of G&W, commented, "Over the past 22 years, the Pinsly team has built an impressive cluster of short line railroads in Arkansas, with a clear focus on safety and customer service. Following the acquisition, G&W will own nine short line railroads in Arkansas, and we are excited about the opportunity to support and drive further economic growth in the state."
John Levine, president and CEO of Pinsly, commented, "Pinsly Railroad Company is very pleased to be transitioning ownership of its Arkansas Division to Genesee & Wyoming. G&W is a highly respected leader in our industry and our customers, employees and communities will be well positioned for continued growth and success in the coming years. I am very pleased and proud of the accomplishments of our talented and dedicated Arkansas team over the past 22 years. We look forward to working with G&W towards a successful closing and transition of the business in January 2015.”
G&W owns short line and regional freight railroads in the United States, Australia, Canada, the Netherlands and Belgium. In addition, G&W Australia operates the 1,400-mile Tarcoola to Darwin rail line, which links the Port of Darwin with the interstate rail network in South Australia. Operations currently include 112 railroads organized in 11 regions, with more than 15,000 miles of owned and leased track, 5,000 employees and over 2,000 customers. G&W subsidiaries provide rail service at 37 ports in North America, Australia and Europe and perform contract coal loading and railcar switching for industrial customers.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release and presentation regarding Genesee & Wyoming's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.