FreightCar America, Inc. has agreed to acquire Navistar’s railcar operations in Cherokee, Ala.
The transaction is expected to close on or around Feb. 28, 2018. No terms were disclosed.
“This acquisition will allow us to now control our own destiny and benefit from the full economics of all future railcars built within the Shoals facility,” said Jim Meyer, President and Chief Executive. “This is good news for our customers, our brand, our products, our people and the Shoals community. I want to thank Navistar for the prior relationship and the Retirement Systems of Alabama, the owners of the facility, for its support in this transaction.”
FreightCar America, headquartered in Chicago, has subleased a substantial portion of the Shoals facility at Barton Riverfront Industrial Park since 2013, and now will become the sole tenant of the approximately 2.2 million square foot facility, which was purpose-built for the manufacture and repair of railcars. Navistar leased the plant from the Retirement Systems of Alabama in 2012, and FreightCar subleased a portion of it a year later.
“We are making important investments in people, technology, equipment and infrastructure to enhance our state-of-the-art facility and world-class workforce, which will increase our operational efficiencies and create long-term value for our shareholders,” said Meyer. “The opportunities afforded to us upon completion of the acquisition, together with the organizational changes and manufacturing best practices that we have already begun to implement, will significantly strengthen our long-term competitive positioning, reduce our costs and allow us to be more responsive to customer needs.”
FreightCar will be offering employment opportunities to the majority of Navistar’s approximately 200 employees on-site, which has a total of 1,000 employees. It will also purchase select operating equipment and inventory at Shoals, and receive a one-time up-front payment to cover future operating costs including rent payments at the facility. Net proceeds to FreightCar will be approximately $3 million at closing.