Pittsburg, Kans.-based Watco—an owner and operator of short lines, terminals, ports and mechanical shops—has entered into a strategic equity relationship with a global investment management firm.
The firm will provide proceeds from a new Series E perpetual preferred equity security, allowing Watco to “refinance part of its capital structure, while also providing additional capital to support Watco’s ongoing customer growth initiatives and fund future acquisition opportunities,” the transportation company reported on July 7. (Watco did not provide Railway Age with the investment management firm name or any further details by press time.)
The private investor is joining Watco’s other strategic equity partners: Oaktree Transportation Infrastructure Fund (TIF), Kinder Morgan and Norfolk Southern (NS). As part of Watco’s capital structure refinancing, SkyKnight Capital, an investor in Watco since 2016, will leave the investment group, Watco said.
“We are excited to announce this investment partnership,” Watco CEO Dan Smith said. “We knew of the investor’s stellar standing as a top-tier investor and are very pleased they are making a preferred equity investment with Watco. The investor has an outstanding reputation for working with fast-growing companies like Watco, and given their experienced team, was able to move quickly and efficiently to provide us with significant capital that is structured to best meet Watco’s needs. This partnership will allow us to continue focusing on growing our business and providing the best possible service to our customers.”
“We’ve appreciated SkyKnight’s investment and support,” Watco EVP and CFO Rick Baden noted. “They’ve been terrific partners over the past five years and have helped us tremendously with our growth initiatives throughout those years. Our relationship with the SkyKnight representatives on Watco’s board, Tom Crowley (CEO of Crowley, a large privately held shipping and logistics company) and Matt Ebbel (Founder and Managing Partner of SkyKnight), was extremely beneficial during what has been and continues to be a very strong growth period for Watco.”
“Watco is an industry-defining company with an exceptional culture and entrepreneurial management team,” SkyKnight Capital Managing Partner Matthew Ebbel said. “On behalf of SkyKnight and our LPs, including the Crowley family, I want to sincerely thank Chairman Rick Webb and the Webb family, CEO Dan Smith, CFO Rick Baden, and the Watco management team for five fantastic years of partnership.”