EXHIBIT 99.1
Genesee & Wyoming's Joint Venture with Wesfarmers
Selected as Winning Bidder for Westrail Freight
GREENWICH, Conn., Oct. 30/PRNewswire/ -- Genesee & Wyoming, Inc. (GWI)
announced today that its newly-formed joint venture, Australian Railroad
Group Pty Ltd (ARG), has signed an agreement with the government of Western
Australia to purchase Westrail Freight for approximately $323 million
including working capital and acquisition fees. The completion of the
transaction is subject to customary closing conditions and is expected by the
end of 2000. ARG is a joint venture owned 50% by GWI and 50% by Wesfarmers
Limited, a public corporation based in Perth, Western Australia.
Westrail Freight is composed of the freight operations of the
currently state-owned railroad of Western Australia. For the fiscal year
ended June 30, 2000, Westrail Freight had revenue of $142 million and
earnings before interest, taxes, depreciation and amortization (EBITDA) of
$49 million. The railroad operates over 3,280 miles of standard and narrow
gauge track and carries approximately 31 million tons of freight per year.
Primary commodities hauled include grain, alumina, iron ore, nickel ore and
wood chips. In connection with the acquisition of Westrail Freight, ARG will
acquire 95 locomotives and approximately 2,500 railcars, as well as a license
to operate the track for 49 years. ARG will also employ approximately 1,000
of Westrail's current 1,125 employees, a staffing level that ARG has agreed
to maintain for at least two years.
To effect the acquisition, GWI will contribute its wholly-owned
Australian operations, Australia Southern Railroad (ASR), to ARG along with
GWI's interest in the Asia Pacific Transport Consortium (APTC) - a consortium
selected to construct and operate the Alice Springs to Darwin railway line in
the Northern Territory of Australia. ASR generated $42.3 million of revenue,
$8.1 million of EBITDA, and $5.7 million of operating income during the
twelve months ended June 30, 2000. Additionally, GWI will contribute $19
million of cash to ARG. GWI expects that its cash contribution will be
partially funded with proceeds from the recently announced private placement
of up to $25 million of Convertible Preferred Stock with the 1818 Fund of
Brown Brothers Harriman & Co.
It is expected that Wesfarmers will contribute $62 million in cash
to ARG for its 50% ownership. ARG has also received binding commitment
letters for $249 million in acquisition debt and $65 million in construction
and working capital facilities from Bank of America and the Australia and New
Zealand Banking Group Limited (ANZ). A portion of these credit facilities
will be used to refinance approximately $7 million of debt currently
outstanding at ASR.
ARG's combined freight operations, including those of ASR and
Westrail, will serve the western half of the Australian continent and will be
the nation's largest private rail operator with pro forma results for the
twelve month period ended June 30, 2000 of $184 million of revenue and $57
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million of EBITDA. The operations will be led by Charles W. Chabot, the
current Senior Vice President of ASR. Mr. Chabot will serve as Chief
Executive Officer of ARG. GWI and Wesfarmers will jointly control ARG, with
each company electing three members to the six seat Board of Directors.
GWI will account for its 50% ownership in ARG under the equity
method of accounting and will therefore be deconsolidating ASR from its
consolidated financial statements. GWI will also recognize a one-time gain
on its contribution of ASR to ARG. GWI expects that its 50% interest in
ARG's net income, pro forma for the Convertible Preferred Stock issuance and
the debt financing, will be accretive to its earnings per share.
Mortimer B. Fuller III, Chairman and Chief Executive Officer of GWI
commented, "We are pleased to be the successful bidder for the high-quality
rail property of Westrail Freight and are especially excited to be combining
our railroading expertise with an outstanding business partner in Wesfarmers.
Through the formation of ARG, we are building on GWI's initial investment in
ASR in 1997 and transforming our operations into a major rail carrier that
will play a significant role in the future of the Australian rail industry."
John C. Hellmann, Chief Financial Officer of GWI, said "The acquisition
of Westrail Freight and the concurrent formation of ARG is an important event
for our company. First, the transaction will contribute significant net
income to GWI and will help to enhance the quarterly stability of our core
earnings. Second, the cumulative impact of the Westrail purchase and the
associated financings will be accretive to GWI's EPS. Through this
transaction, we hope to continue the EPS momentum that we have built over the
past 18 months."
Wesfarmers is a public company listed on the Australian Stock Exchange
with a market capitalization of $2.0 billion and annual revenues of $1.8
billion. Its major businesses include energy (coal and gas), fertilizers and
chemicals, rural merchandising, insurance and financial services, forest
products, and transportation. Wesfarmers is based in Perth, Western
Australia.
GWI is a leading operator of short line and regional freight railroads
in the United States, Canada, Mexico and Australia, and provides freight car
switching and related services to industrial companies that have extensive
railroad facilities within their complexes. In 1999, GWI marked the
one-hundredth anniversary of its founding as a 14-mile railroad in upstate
New York. The Company today operates in four countries on two continents
over 3,750 miles of owned and leased track. It also operates over an
additional 2,700 miles under track access arrangements. In October 2000, the
Company was ranked 99th on Forbes magazine's list of the 200 best small
companies in America.
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This press release contains forward-looking statements regarding future
events and the future performance of Genesee & Wyoming Inc. that involve
risks and uncertainties that could cause actual results to differ materially
including, but not limited to, economic conditions, customer demand,
increased competition in relevant markets, and others. We refer you to the
documents that Genesee & Wyoming Inc. files from time to time with the
Securities and Exchange Commission, such as the Company's Forms 10-Q and 10-K
which contain additional important factors that could cause its actual
results to differ from its current expectations and from the forward-looking
statements contained in this press release. All monetary references are in
US dollars and based on current exchange rates.
SOURCE Genesee & Wyoming Inc. 10/30/2000
/CONTACT: John C. Hellmann, Chief Financial Officer of Genesee &
Wyoming Inc., 203-629-3722/
/Web site: http://www.gwrr.com/
(GNWR)
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