FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MAY 25, 2005
GENESEE & WYOMING INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 001-31456 06-0984624
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
66 FIELD POINT ROAD, GREENWICH, CT 06830
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code : (203) 629-3722
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
PARTIES TO THE AGREEMENT.
On May 25, 2005, two wholly owned subsidiaries of Genesee & Wyoming Inc.
("GWI"), RP Acquisition Company One, a Delaware corporation ("RP GP Buyer"),
and RP Acquisition Company Two, a Delaware corporation ("RP LP Buyer" and
together with RP GP Buyer, the "Buyers"), entered into an agreement (the
"Agreement") with Rail Management Corporation, a Delaware corporation ("RMC"),
Durden 1991 Family Gift Trust, a Florida trust (the "91 Family Gift Trust"),
Durden 1991 Family Discretionary Trust, a Florida trust (the "Discretionary
Trust"), Durden 1991 Family Trust, a Florida trust (the "Family Trust"), K.
Earl Durden 1991 Gift Trust, an Alabama trust (the "Gift Trust"), and Durden
1996 Family Gift Trust, a Florida trust (the "96 Family Gift Trust", together
with the 91 Family Gift Trust, the Discretionary Trust, the Family Trust and
the Gift Trust, the "Trusts", and together with RMC, the "Sellers"). The
Agreement is attached hereto and incorporated by reference.
KEY TERMS OF THE AGREEMENT.
Pursuant to the terms of the Agreement, RP GP Buyer will purchase:
(A) all of the general partnership interest of Rail Partners, L.P.,
a Delaware limited partnership ("RPLP");
(B) the 1% general partnership interest in each of Atlantic &
Western Railway, Limited Partnership, a North Carolina limited
partnership ("AWR"), East Tennessee Railway, L.P., a Tennessee
limited partnership ("ETR"), Galveston Railroad, L.P., a Texas
limited partnership ("Galveston"), Georgia Central Railway, L.P., a
Georgia limited partnership ("GCR"), Little Rock & Western Railway,
L.P., an Arkansas limited partnership ("LRW"), Tomahawk Railway,
Limited Partnership, a Wisconsin limited partnership ("Tomahawk"),
Valdosta Railway, L.P., a Georgia limited partnership ("Valdosta"),
and Wilmington Terminal Railroad, Limited Partnership, a North
Carolina limited partnership ("WTR", together with AWR, ETR,
Galveston, GCR, LRW, Tomahawk and Valdosta, the "Railroad LPs"); and
RP LP Buyer will purchase:
(A) all of the limited partnership interest in RPLP;
(B) 0.99% of the membership interests in The Bay Line Railroad,
L.L.C., an Alabama limited liability company ("Bay Line"), 1.01% of
the membership interests in Western Kentucky Railway, L.L.C., a
Commonwealth of Kentucky limited liability company ("WKR"), 1% of
the membership interests in each of AN Railway, L.L.C., a Florida
limited liability company ("ANR"), M&B Railroad, L.L.C., an Alabama
limited liability company ("M&B"), and Riceboro Southern Railway,
LLC, a Georgia limited liability company ("Riceboro", and together
with ANR, Bay Line, M&B and WKR, the "Railroad LLCs"); and
(C) all of the issued and outstanding shares of each of Evansville
Belt Line Railroad, Inc., an Indiana corporation ("Evansville"),
Grizzard Transfer Company, Inc., a Georgia corporation ("Grizzard"),
and KWT Railway, Inc., a Tennessee corporation ("KWT", and together
with Evansville and Grizzard, the "QSubs", and together with RPLP,
the Railroad LPs and the Railroad LLCs, the "Acquired Entities").
Upon completion of the transaction, RP GP Buyer and RP LP Buyer will
directly or indirectly own all of the capital stock, membership interests
and partnership interests (as applicable) of the Acquired Entities.
The acquisition is subject to customary closing conditions, including but
not limited to approval by the United States Surface Transportation Board. The
acquisition is expected to be completed on or about June 1, 2005. The purchase
price is $243 million, which amount is subject to adjustment post-closing
based on the working capital of the Acquired Entities and their subsidiaries
on the closing date. The Acquired Entities are expected to have $1.7 million
of non-interest bearing debt at closing. The purchase price was determined on
an arm's-length negotiated basis. There are no material relationships between
GWI and the Buyers on the one hand and any other party to the Agreement, on
the other hand, other than in respect of the Agreement.
DESCRIPTION OF THE ACQUIRED ENTITIES.
Founded in 1980, RMC, headquartered in Panama City Beach, Florida, is an
operator of short line railroads. The business being acquired is composed of
fourteen principal rail operations with locations throughout the South and
Southeast United States, including Florida, Alabama, Mississippi, Georgia,
Arkansas, Texas, North Carolina, Tennessee and Kentucky.
2
There is also one rail property located in Wisconsin. The main
operations are composed of: (i) five former industrial railroads serving the
paper and forest products industry, (ii) seven short line railroads, and (iii)
two port railroads. RMC operates over 928 miles of track, with 88 locomotives
and 1,751 freight cars. The railroads handle approximately 170,000 annual
carloads, with approximately 50% of its customers being in the paper and
forest products industry.
The Acquired Entities will be operated as part of GWI's
Jacksonville-based Rail Link subsidiary, under the leadership of Billy C.
Eason. The acquisition of the five former industrial railroads complements
Rail Link's current paper and forest products business which includes three
railroads formerly owned by Georgia-Pacific Corp. (acquired in 2003) and
industrial switching operations at eight paper mills throughout the Southeast.
The acquisition of the two port railroad operations (Galveston, TX;
Wilmington, NC) as well as two ports served by two of the other rail lines
(Panama City, FL; Port St. Joe, FL) complements Rail Link's seven existing
port operations (Corpus Christi, TX; Jacksonville, FL; Fernandina, FL; two
ports in Savannah, GA; Brunswick, GA; Baton Rouge, LA). The remaining short
lines will be managed along with Rail Link's existing eleven short line
operations.
The information set forth under Item 2.03 "Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement of a
Registrant" is incorporated herein by reference.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
On May 25, 2005, GWI entered into an amendment to its amended and
restated unsecured senior credit facility. The amendment permits the
acquisition described above and increases GWI's senior revolving credit
facility from $150 million to $225 million. GWI will use proceeds from the
revolving credit facility to pay a portion of the purchase price. The
remaining unused borrowing capacity will be available for general corporate
purposes, including acquisitions.
In addition, the amendment extends the maturity of the revolving credit
facility to June 1, 2010 and permits the incurrence by GWI of up to an
additional $125 million of senior notes. The amendment increases the maximum
leverage covenant (measured as Funded Debt (indebtedness plus guarantees
including Letters of Credit, plus the present value of operating leases) to
EBITDAR (earnings before interest, taxes, depreciation, amortization and
rental payments on operating leases)) to 3.75 times through December 31, 2005.
The capital expenditure basket has been increased from $42 million to $51
million per fiscal year, and the permitted acquisition basket has been
increased from $75 million to $100 million per acquisition. The basket for an
incremental credit facility has been reduced from $100 million to $50 million.
This summary is qualified in its entirety by reference to the text of the
amendment to its amended and restated unsecured senior credit facility, which
is attached hereto and incorporated by reference.
ITEM 9.01 EXHIBITS
Exhibit No. Description
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99.1 Securities Purchase Agreement, dated as of May 25, 2005, by and
among Rail Management Corporation, Durden 1991 Family Gift
Trust, Durden 1991 Family Discretionary Trust, Durden 1991
Family Trust, K. Earl Durden 1991 Gift Trust, Durden 1996
Family Gift Trust, RP Acquisition Company One and RP
Acquisition Company Two
99.2 Consent and First Amendment to Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of May 25, 2005, by
and among (a) Genesee & Wyoming, Inc. ("GWI" or the "US
Borrower"), (b) Quebec Gatineau Railway Inc. ("Quebec" or the
"Canadian Borrower", collectively the US Borrower and the
Canadian Borrower, the "Borrowers"), (c) the Subsidiaries of
the US Borrower listed on Schedule I thereto and any other
Person which may become a guarantor of the Obligations in
accordance with ss.9.14 thereof (the "US Guarantors"),
(d) Genesee & Wyoming Canada Inc., Mirabel Railway Inc., Huron
Central Railway Inc. and St. Lawrence & Atlantic Railroad
(Quebec) Inc. and any other Person which may become a guarantor
of the Canadian Obligations in accordance with ss.9.14 thereof
(the "Canadian Guarantors"), (e) Bank of America, N.A. and the
other lending institutions listed on Schedule II thereto,
(f) Bank of America, N.A., as administrative agent for itself
and such lending institutions
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENESEE & WYOMING INC.
By: /S/ ADAM B. FRANKEL
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Name: Adam B. Frankel
Title: Senior Vice President,
General Counsel & Corporate
Secretary
Dated: June 1, 2005