| Item 1.01 | Entry into a Material Definitive Agreement. |
On April 17, 2019, The Greenbrier Companies, Inc. (“Greenbrier”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) by and among Greenbrier, GBXL, LLC, an Oregon limited liability company and a wholly-owned subsidiary of Greenbrier (such subsidiary, together with Greenbrier, the “Company”), and American Railcar Industries, Inc., a North Dakota corporation (“Seller”). Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, the Company agreed to purchase Seller’s railcar and railcar components manufacturing business (the “Business”). The purchase and sale will be effected through the Company’s acquisition of the assets and assumption of the liabilities that are primarily related to the Business (the “Transaction”).
The gross purchase price to be paid by the Company at the closing of the Transaction (the “Closing”) in consideration for the Business (the “Purchase Price”) is expected to be approximately $430 million. The Purchase Price includes $30 million for capital expenditures on railcar lining operations and other facility improvements. The Purchase Price also includes the issuance by Greenbrier of a $50 million principal amount senior unsecured convertible promissory note (the “Convertible Note”). The Purchase Price is subject to a working capital and other customary post-Closing adjustments.
The Closing is subject to customary conditions, including, among other things, the expiration or early termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the absence of any law or order preventing the Closing, and the absence of a material adverse effect on the Business. The Purchase Agreement contains representations and warranties from both the Company and Seller and various covenants.
If the Transaction has not been consummated on or before the earlier of three months from the date of the Purchase Agreement and the date that is ten business days following Greenbrier’s receipt of a demand for additional information from the U.S. Department of Justice or U.S. Federal Trade Commission (the earlier of these events the “End Date”), then Greenbrier may extend the End Date by six months by delivering a $25 millionnon-refundable deposit to Seller (the “Deposit”) and agreeing to reimburse Seller for certain expenses. The Deposit shall be applied against the Purchase Price at the Closing or deemed to satisfy the termination fee (described below) upon a subsequent termination of the Purchase Agreement. If the Transaction has not been consummated before the End Date as initially extended by Greenbrier, then Greenbrier may extend the End Date by an additional three months.
The Purchase Agreement contains termination rights, including, among other rights, each party’s right to terminate the Purchase Agreement if the Transaction is not consummated by the End Date (as extended) (an “End Date Termination”) or if any governmental order prohibiting the Transaction becomes final andnon-appealable or any law is in effect that renders the Transaction illegal (a “Governmental Order Termination”). Upon the occurrence of a Governmental Order Termination or an End Date Termination where at such date the parties have failed to obtain approval under the HSR Act, then Greenbrier will be required to pay a termination fee to Seller in the amount of $25 million unless the Deposit has been previously delivered. Subject to the limitations set forth in the Purchase Agreement, each of the Company and Seller have agreed to indemnify the other party following the Closing against certain losses resulting from breaches of specified representations and warranties made by the indemnifying party, and thenon-fulfillment by the indemnifying party of certain obligations in the Purchase Agreement.
As indicated above, as partial consideration for the Transaction, Greenbrier expects to deliver to Seller at the Closing the Convertible Note. After its issuance, the Convertible Note will accrue interest at a rate of 2.25% per annum, which interest is payable semi-annually. The Convertible Note is expected to mature on the fifth anniversary of the Closing and will not be redeemable by Greenbrier prior to its maturity. The Convertible Note will be convertible into shares of Greenbrier’s common stock as further described under Item 3.02 below. The Convertible Note is expected to provide that if Greenbrier undergoes certain fundamental changes prior to its maturity, then the Convertible Note holder will have the option to require Greenbrier to repurchase up to all of the note for cash at 100% of the applicable principal amount, plus accrued and unpaid interest. The Convertible Note provides for customary events of default as set forth therein.
The foregoing descriptions of the Purchase Agreement and the Convertible Note do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Purchase Agreement and the Form of Convertible Note which are filed herewith as Exhibit 2.1 and Exhibit 4.1, respectively, and are incorporated herein by reference. To the extent required by Item 1.01 ofForm 8-K, the information contained in (or incorporated by reference into) Item 3.02 of this Current Report onForm 8-K is hereby incorporated by reference into this Item 1.01.
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