Greenbrier ups Brazilian investments

The Greenbrier Companies, Inc. on May 24, 2016 entered into an agreement to acquire a 19.5% ownership stake in Amsted-Maxion Cruzeiro for $10 million.

Based in Cruzeiro, Brazil, Amsted-Maxion Cruzeiro is a manufacturer of castings and components for railcars and other heavy equipment. The company is owned 50/50 by Amsted Rail Company, Inc. and Iochpe-Maxion S.A., prior to Greenbrier’s investment, which is subject to customary closing conditions, including antitrust review, and is expected to close in the fourth quarter of Greenbrier’s fiscal 2016.

“Amsted-Maxion Cruzeiro will use Greenbrier’s strategic investment to pay down outstanding debt and position the company for future growth,” Greenbrier said.

Amsted-Maxion Cruzeiro is also co-owner with Greenbrier of Amsted-Maxion Equipamentos E Serviços Ferroviários S.A., the Brazilian railcar manufacturer based in Hortolândia. Greenbrier currently owns 19.5% of Greenbrier-Maxion, while Amsted-Maxion Cruzeiro holds the remaining 80.5% equity interest.Upon exercising purchase options it holds, Greenbrier can potentially own up to a 60% direct equity interest in Greenbrier-Maxion. When Greenbrier completes the current investment in Amsted-Maxion Cruzeiro it will, directly and indirectly, own 35% of the outstanding equity of Greenbrier-Maxion.

Amsted-Maxion Cruzeiro serves a broad range of transportation equipment markets throughout Latin America, and provides railcar castings and components to Greenbrier-Maxion. The company also supplies components for heavy equipment used in agriculture, mining and other industrial applications. Net sales of Amsted-Maxion Cruzeiro totaled approximately $100 million in calendar 2015. Greenbrier-Maxion achieved more than $200 million in net sales for the same period.

As part of this investment, Greenbrier has secured an option, subject to certain conditions, to acquire an additional 10% interest in Amsted-Maxion Cruzeiro. Greenbrier’s option expires on October 20, 2017. Amsted, Iochpe and Greenbrier will also enter a shareholders’ agreement that provides Greenbrier customary minority governance protections in Amsted-Maxion Cruzeiro.

In 2015, as part of its initial investment in Greenbrier-Maxion, Greenbrier secured an option to acquire an additional 40.5% direct ownership interest in Greenbrier-Maxion.The option is exercisable until Dec. 30, 2017, but has been modified as part of the current transaction to provide Greenbrier greater flexibility. The option now allows Greenbrier to purchase an additional direct ownership interest in Greenbrier-Maxion at any point in a range between 30.6% and 40.5%, with the option exercise price adjusted in proportion to the ownership interest obtained.

“Our first year of operations with Amsted and Iochpe at Greenbrier-Maxion has been an unqualified success,” said Greenbrier Chairman and CEO William A. Furman. “Global markets are increasing in strategic importance for Greenbrier. Over the years, Greenbrier has successfully participated in several joint ventures, internationally and domestically. I am pleased to extend our partnership in Brazil with Amsted and Iochpe beyond railcar manufacturing into castings and components for railcars and other heavy equipment.”