FREIGHTCAR AMERICA, INC. (NASDAQ:RAIL) Files An 8-K Entry into a Material Definitive AgreementItem 1.01
On February 28, 2018, FreightCar America, Inc. (the “Company”), through its wholly owned subsidiary, FreightCar Alabama, LLC (“FreightCar Alabama”), acquired substantially all of the operating assets of Navistar, Inc. (“Navistar”) and its wholly owned subsidiary, International Truck and Engine Investments Corporation (“International Truck” and, together with Navistar, the “Sellers”), at Navistar’s facility in Cherokee, Alabama (the “Facility”), including the Sellers’ railcar business, and assumed the lease for the Facility (the “Acquisition”) to the Asset Purchase Agreement (the “Purchase Agreement”), dated February 26, 2018, by and among FreightCar Alabama and the Sellers. The purchase price payable by FreightCar Alabama for the Acquisition was $17,264,284 in cash, plus the value of the inventory acquired at closing, which was estimated at $3,510,000 and is subject to a post-closing adjustment as provided in the Purchase Agreement. The amount of the purchase price payable by FreightCar Alabama at closing was offset by $24,130,000 payable by the Sellers to FreightCar Alabama in respect of future rent payments under the Lease (as defined below), and certain other closing payments provided for under the Purchase Agreement, resulting in a net payment by the Sellers to FreightCar Alabama at closing of approximately $2.76 million.
Also on February 28, 2018, as a condition to the closing of the Acquisition, the Company, through FreightCar Alabama, and Navistar entered into an Assignment and Assumption of Lease (the “Assignment and Assumption”) to which FreightCar Alabama assumed from Navistar, and Navistar assigned to FreightCar Alabama, the Industrial Facility Lease, dated as of September 29, 2011, by and between Teachers’ Retirement Systems of Alabama and the Employees’ Retirement System of Alabama, as landlord (collectively, the “Landlord”), and Navistar, as tenant (as amended, the “Lease”), for the Facility. The Facility consists of approximately 700 acres of land and an approximately 2,150,000-square-foot manufacturing facility. The initial term of the Lease expires on December 31, 2021 and FreightCar Alabama may extend the term of the Lease for an additional 120 months by giving notice thereof to the Landlord. The Lease includes customary representations, warranties and covenants of the parties and events of default. In addition, to the Assignment and Assumption, the parties terminated the sublease to which FreightCar Alabama has subleased from Navistar a portion of the Facility since February 2013. The Company will guaranty the obligations of FreightCar Alabama under the Lease.
The foregoing descriptions of the Lease and the Assignment and Assumption do not purport to be complete and are qualified in their entirety by reference to the Lease and the Assignment and Assumption to be filed as exhibits to the Company’s quarterly report on Form 10-Q for the quarter ending March 31, 2018.
| Item 1.02 | Termination of a Material Definitive Agreement. |
The information provided under Item 1.01 above is incorporated herein by reference to the extent applicable.
Section 2 – Financial Information
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
The information provided under Item 1.01 above is incorporated herein by reference to the extent applicable.
About FREIGHTCAR AMERICA, INC. (NASDAQ:RAIL)
FreightCar America, Inc. is a manufacturer of railcars and railcar components. The Company operates in the Manufacturing segment. The Company designs and manufactures a range of railcar types for transportation of bulk commodities and containerized freight products primarily in North America, including open top hoppers, covered hoppers, and gondolas along with intermodal and non-intermodal flat cars. The Company manufactures aluminum-bodied railcars, including coal cars. The Manufacturing segment includes new railcar manufacturing, used railcar sales, railcar leasing and major railcar rebuilds. The Company refurbishes and rebuilds railcars, and sells forged, cast and fabricated parts for all of the railcars. The Company also leases freight cars through its JAIX Leasing Company subsidiary. The Company’s railcar manufacturing facilities are located in Cherokee, Alabama (Shoals), Danville, Illinois and Roanoke, Virginia.