DOW JONES NEWSWIRES
Struggling railroad-supply company Greenbrier Cos. (GBX) will
get a $75 million term loan from distressed-asset investor WL Ross
& Co. and has reduced by nearly two-thirds its North American
revolving credit line, terms on which have been dramatically
eased.
Earlier this year, Greenbrier halved its dividend and announced
cost-cutting measures to help improve liquidity. But railcar demand
has continued to soften, and the company has been looking to
conserve cash amid an industry downturn that is projected to last
into next year. Its credit ratings have suffered amid worries that
weakening demand might hinder its ability to meet its financial
covenants.
Greenbrier has also been diversifying into less cyclical
businesses, including refurbishment and parts, leasing and
services, and marine manufacturing. More than half of the company's
revenue in its latest fiscal year came from outside railcar
production.
Greenbrier said Thursday it would use the three-year loan from
WL Ross to pay down debt and use for future growth. If Greenbrier
and WL Ross agree, the loan could increase to $150 million.
In connection with the loan, Greenbrier has issued warrants to
WL Ross to purchase 3.4 million shares, which would be a 17% stake,
with a $6 strike price. That is a 25% discount to Wednesday's
closing price. Despite nearly tripling in the last three months,
the stock is still off 65% in the last year.
In addition, WL Ross will also buy at least $1.5 million in
stock; Greenbrier's market value is about $137 million.
WL Ross is controlled by billionaire investor Wilbur Ross, who
last month made a foray into U.S. banking by picking up a large
piece of BankUnited Financial Corp. (BKUNA). WL Ross is an
affiliate of money-management giant Invesco Ltd. (IVZ).
Meanwhile, Greenbrier cut back the size of its revolving- credit
facility to $100 million from $290 million and amended some of its
financial covenants to be "significantly more accommodative." The
company said it has nothing drawn on the revolving facility, and
doesn't expect to draw on it until it sees an upturn in the economy
and market demand.
The company said the next maturity of any "significant" debt is
in May 2013.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com
