(RailAmerica issued the following news release on October 3.)
BOCA RATON, Fla.– RailAmerica, Inc. today announced the completion of its acquisition of four short line railroads from Alcoa for a purchase price of $77.5 million in cash. The cash purchase price is based on RailAmerica assuming a targeted working capital deficit. RailAmerica funded substantially all of the cash purchase price through a $75 million increase in the term loan portion of its existing senior secured credit facility.
The four railroads acquired serve Alcoa aluminum manufacturing operations in Texas and New York and a former Alcoa owned specialty chemicals facility in Arkansas. For the twelve months ended June 30, 2005, the four railroads handled 30,000 carloads, generated revenue of $20.8 million, resulting in operating income of $10.1 million and had depreciation and amortization expense of $0.2 million. The four railroads, which operate a total of 25 miles, had capital expenditures of $50,000 for the twelve months ended June 30, 2005.
RailAmerica has agreed to acquire the stock of the railroads under Section 338(h) (10) of the Internal Revenue Code and will therefore benefit from the stepped-up tax basis of the assets.
Charles Swinburn, Chief Executive Officer of RailAmerica said, “We are pleased to have these four railroads and the dedicated employees who serve them join RailAmerica. In addition to a well maintained asset base and excellent customers, the railroads have a history of strong cash flow generation. RailAmerica expects that the transaction will be accretive in the first year.”
RailAmerica, Inc. (NYSE:RRA) is a leading short line and regional rail service provider with 47 railroads operating approximately 8,875 miles in the United States and Canada. The Company is a member of the Russell 2000(R) Index. Its website may be found at http://www.railamerica.com.