FreightCar America now owns 100% of Castaños Mexico, where all of its future railcar manufacturing is expected to be based by February 2021. It has completed the acquisition of the remaining 50% of its joint-venture partnership with Fasemex (Fabricaciones y Servicios de México).
As a partner, FreightCar America invested more than $35 million in Castaños, which currently has two production lines.
Last month, FreightCar America announced it had signed a letter of intent and was engaged in negotiations to acquire the remaining 50% ownership. Earlier this month, the company secured asset-based financing to complete the deal.
Jesus Gil, an owner of Fasemex, is General Manager of Castaños. He will also serve as Vice President of Operations for FreightCar America and join the Board of Directors. Gil has 30 years of manufacturing experience, primarily in the railcar industry.
FreightCar America has also entered a new $40 million secured term loan credit agreement with a global investment management firm to “drive its growth strategy,” including expansion of the Castaños production line. It is subject to stockholder approval.
“We exit a prolonged period when our business was hampered by high costs, sustained losses and a generally challenged competitive position,” President and CEO Jim Meyer said. “We now enter a new chapter, where our business will be supported by a single new production facility designed specific to our needs, a highly experienced and cost competitive workforce, and a significantly enhanced competitive profile that includes a $25 million reduction in annual fixed costs achieved through the closures of our two facilities in Cherokee, Ala. (“Shoals”) and Roanoke, Va.”