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As filed with the Securities and Exchange Commission on March 6, 1998
Registration No. 333-47447
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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RAILAMERICA, INC.
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(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 4011 65-0328006
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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301 YAMATO ROAD
SUITE 1190
BOCA RATON, FLORIDA 33431
(561) 994-6015
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
GARY O. MARINO
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
RAILAMERICA, INC.
301 YAMATO ROAD
SUITE 1190
BOCA RATON, FLORIDA 33431
(561) 994-6015
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code of Agent for Service)
Please send copies of all communications to:
GARY EPSTEIN, ESQ.
GREENBERG TRAURIG HOFFMAN LIPOFF ROSEN & QUENTEL, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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TITLE OF SHARES TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF REGISTRATION
REGISTERED AMOUNT TO BE REGISTERED AGGREGATE PRICE PER SHARE AGGREGATE OFFERING PRICE FEE
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Common Stock 131,550 $7.50 $986,625 $292
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The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Filed Pursuant to Rule 424(b)(1)
Registration No. 333-47447
PROSPECTUS
RAILAMERICA, INC.
131,550 SHARES OF COMMON STOCK
This Prospectus relates to an aggregate of 131,550 shares (the
"Securities") of Common Stock, par value $.001 per share (the "Common Stock"),
of RailAmerica, Inc., a Delaware corporation (together with its consolidated
subsidiaries, the "Company"), proposed to be sold from time to time by certain
shareholders of the Company (the "Selling Securityholders"). See "Selling
Securityholders." The Company will not receive any proceeds from the sale of the
Securities by the Selling Securityholders.
The Company has registered the Securities under the Securities Act of
1933, as amended (the "Securities Act"), for sale by the Selling
Securityholders. The Selling Securityholders have advised the Company that they
may from time to time sell all or part of the Securities in one or more
transactions (which may involve block transactions) in the over-the-counter
market, on The Nasdaq National Market (or any exchange on which the Securities
may then be listed), in negotiated transactions, through the writing of options
on the Securities (whether such options are listed on an options exchange or
otherwise), or a combination of such methods of sale, at market prices
prevailing at the time of such sales or at negotiated prices. The Selling
Securityholders may effect such transactions by selling the Securities to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of underwriting discounts, concessions or commissions from the Selling
Securityholders and/or purchasers of the Securities for whom they may act as
agent (which compensation may be in excess of customary commissions). The
Selling Securityholders may also pledge the Securities as collateral for margin
accounts or loans and the Securities could be resold pursuant to the terms of
such accounts or loans. In connection with such sales, the Selling
Securityholders and any participating brokers and dealers may be deemed to be
"underwriters" as defined in the Securities Act. Neither the Company nor the
Selling Securityholders can presently estimate the amount of commissions or
discounts, if any, that will be paid by the Selling Securityholders on account
of their sale of the Securities from time to time. The Company will pay all
expenses, estimated to be approximately $25,000, in connection with this
offering, other than underwriting and brokerage commissions, discounts, fees and
counsel fees and expenses incurred by the Selling Securityholders.
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THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE. FOR A
DISCUSSION OF CERTAIN RISKS WHICH SHOULD BE CONSIDERED IN
EVALUATING AN INVESTMENT IN THE SECURITIES,
SEE "RISK FACTORS" ON PAGES 2 TO 6.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is March 18, 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Atlanta Regional Office of the Commission at
3475 Lenox Road, N.E., Suite 1000, Atlanta, Georgia 30326-7232. Copies of such
materials may also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Copies of each document may also be obtained through the Commission's
Internet address at http://www.sec.gov. The Common Stock of the Company is
quoted on The Nasdaq National Market System under the symbol "RAIL." Reports,
proxy statements and other information concerning the Company may be inspected
at the offices of NASDAQ, 1735 K. Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities offered hereby. This Prospectus, which is a part of
the registration statement, does not contain all the information set forth in,
or annexed as exhibits to, such registration statement, certain portions of
which have been omitted pursuant to rules and regulations of the Commission. For
further information with respect to the Company and the Securities, reference is
made to such registration statement, including the exhibits thereto, copies of
which may be inspected and copied at the aforementioned facilities of the
Commission. Copies of such registration statement, including the exhibits, may
be obtained from the Public Reference Section of the Commission at the
aforementioned address upon payment of the fee prescribed by the Commission.
Copies of each document may also be obtained through the Commission's internet
address at http://www.sec.gov. The summaries contained in this Prospectus of
additional information included in the Registration Statement or any exhibit
thereto are qualified in their entirety by reference to such information or
exhibit.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents which have been filed by the Company with the
Commission pursuant to the Exchange Act or the Securities Act are incorporated
by reference in this Prospectus:
* The Company's Annual Report on Form 10-KSB/A for the year
ended December 31, 1996.
* The Company's Quarterly Reports on Form 10-Q for the periods
ended March 31, 1997, June 30, 1997 and September 30, 1997.
* The Company's Current Reports on Form 8-K filed with the
Commission on January 1, 1998 and January 26, 1998.
* The Company's Definitive Proxy Statement on Schedule 14A as
filed with the Commission on June 28, 1997.
* All other reports filed by the Registrant pursuant to Section
13(a) or 15 (d) of the Exchange Act since the end of fiscal
year 1996.
* The discussion of the Registrant's Common Stock in the
section entitled "Description of Capital Stock" contained in
the Registrant's Registration Statement on Form S-2 (File No.
333-22479), first filed with the Securities and Exchange
Commission on February 27, 1997, as amended.
In addition, all documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities
offered hereby shall be deemed to be incorporated herein by reference and to be
a part hereof from the date of filing of such documents.
Any information contained herein or in a document incorporated by
reference herein shall be deemed to be modified or replaced for purposes of this
Prospectus to the extent that information contained herein or in any other
subsequently filed document which also is incorporated by reference herein
modifies or replaces such information. Any such information so modified or
replaced shall not be deemed, except as so modified or replaced, to constitute a
part of this Prospectus.
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The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
upon the written or oral request of any such person, a copy of any and all of
the above documents (not including exhibits to any of such documents unless such
exhibits are specifically incorporated by reference into such documents). Such
requests should be addressed to the Secretary, RailAmerica, Inc., 301 Yamato
Road, Suite 1190, Boca Raton, Florida 33431, telephone number (561) 994-6015.
RISK FACTORS
BEFORE PURCHASING ANY OF THE SECURITIES OFFERED HEREBY, A PROSPECTIVE
PURCHASER SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, IN ADDITION TO
THE OTHER INFORMATION IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT") WITH RESPECT TO
THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY.
THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES.
FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS INCLUDE, AMONG MANY OTHERS, THE
FOLLOWING: (1) COMPETITIVE CONDITIONS IN THE INDUSTRY IN WHICH THE COMPANY
OPERATES AND (2) GENERAL ECONOMIC CONDITIONS THAT ARE LESS FAVORABLE THAN
EXPECTED.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, AMONG OTHER THINGS, THE
FOLLOWING FACTORS BEFORE A DECISION IS MADE TO PURCHASE ANY COMMON STOCK.
DEPENDENCE ON CLASS I RAILROADS. The railroad industry in the United
States is dominated by a small number of large Class I carriers that have
substantial market control and negotiating leverage. Almost all of the traffic
on the Company's railroads is interchanged with Class I carriers. A decision by
any of these Class I carriers to discontinue transporting certain commodities or
to use alternate modes of transportation, such as motor carriers, could
adversely affect the Company's business and results of operations. The Company's
ability to provide rail service to its customers depends in large part upon its
ability to maintain cooperative relationships with Class I connecting carriers
with respect to, among other matters, freight rates, car supply, reciprocal
switching, interchange and trackage rights. A deterioration in the operations of
or service provided by those connecting carriers or in the Company's
relationship with its connecting carriers, would adversely affect the Company's
business. In addition, much of the freight transported by the Company's
railroads moves on railcars supplied by Class I carriers. If the number of
railcars supplied by Class I carriers are insufficient, shippers may seek
alternative forms of transportation. If these carriers were to reduce the number
of railcars available for use by its railroads, the Company might not be able to
obtain replacement railcars on favorable terms.
Portions of the Company's rail properties are operated under leases,
operating agreements or trackage rights agreements with Class I carriers.
Failure of the Company's railroads to comply with such leases and agreements in
all material respects could result in the loss of operating rights with respect
to such rail properties, which would adversely affect the Company's results of
operations and financial condition. In addition, Class I carriers also have
traditionally been significant sources of business for the Company, as well as
sources of potential acquisition candidates as Class I carriers continue to
divest themselves of branch lines to smaller rail operators. As a result of the
foregoing factors, a deterioration of the Company's relationships with Class I
carriers would have a material adverse effect on the Company's results of
operations and financial condition.
DEPENDENCE ON AGRICULTURAL INDUSTRY; SEASONALITY. A substantial portion
of the Company's traffic consists of agricultural commodities. As a result,
factors that generally affect the agricultural industry in the regions in which
the Company operates could have a material adverse effect on the Company's
results of operations and financial condition. These factors include, without
limitation, weather conditions and fluctuations in agricultural prices. Sellers
of agricultural commodities typically do not ship their products until they deem
prices to be advantageous. As a result, the number of carloads handled by the
Company and its recognition of revenue may vary significantly from period to
period as a result of fluctuations in the prices for those commodities.
Shipments of agricultural commodities, on an overall basis, occur seasonally,
with the majority of the agricultural products typically shipped by the Company
being shipped from September through May. As a result, the revenues derived by
the Company from such shipments will normally be higher during these months than
during the summer months. The Company believes that agricultural commodities
will continue to represent the primary component of the Company's rail traffic
base in the near future.
GROWTH THROUGH ACQUISITIONS. The Company has experienced significant
growth in revenues, primarily through the completion of acquisitions.
Acquisitions result in greater administrative burdens and result in additional
operating costs and, if financed with debt, additional interest costs.
Acquisitions also involve a number of other
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risks, including diversion of management's attention to the assimilation of
operations and personnel of the acquired companies, the difficulty of
integrating acquired companies into the Company's management information and
financial reporting systems, possible adverse short-term effects on the
Company's operating results and an adverse impact on earnings from the
amortization of acquired intangible assets and, if financed with equity,
potential per share dilution to existing stockholders. There can be no assurance
that management will be able to find, finance and complete further suitable
acquisitions on terms acceptable to the Company, that it will be able to
integrate effectively any acquisitions made, that the businesses acquired can be
operated profitabilty, or that the Company can assimilate the operations of such
businesses into its own operations.
INTERNATIONAL BUSINESS RISKS. The risks of doing business in foreign
countries include potential adverse changes in the diplomatic relations of
foreign countries with the United States, hostility from local populations,
adverse effects of currency exchange controls, restrictions on the withdrawal of
foreign investment and earnings, government policies against ownership of
businesses by non-nationals, expropriations of property, the potential
instability of foreign governments and the risk of insurrections that could
result in loses against which the Company is not insured. The Company's
operations in foreign countries are also subject to economic uncertainties,
including among others, risk of renegotiation or modification of existing
agreements or arrangements with governmental authorities, exportation and
transportation tariff, foreign exchange restrictions and changes in taxation
structure.
GOVERNMENTAL REGULATION OF RAILROAD OPERATIONS. The Company is subject
to governmental regulation by the Surface Transportation Board ("STB"), the
Federal Railroad Administration and other federal, state and local regulatory
authorities with respect to certain rates and railroad operations, as well as a
variety of health, safety, labor, environmental and other matters, all of which
could potentially affect the competitive position and profitability of the
Company. All railroad industry employees are covered by the Railroad Retirement
Act and the Railroad Unemployment Insurance Act in lieu of Social Security and
other federal and state unemployment insurance programs. Employer contributions
under the Railroad Retirement Act are currently about triple those required
under Social Security. Management of the Company believes that the regulatory
freedoms granted by the Staggers Rail Act have been beneficial to the Company by
giving it flexibility to adjust prices and operations to respond to market
forces and industry changes. However, various interests, and certain members of
the United States House of Representatives and Senate that have jurisdiction
over federal regulation of railroads, have from time to time expressed their
intention to support legislation that would eliminate or reduce certain
significant freedoms granted by the Staggers Rail Act. If enacted, these
proposals, or court or administrative rulings to the same effect under current
law, could have a significant adverse effect on the Company.
DEPENDENCE ON GOVERNMENT GRANTS. The Company has, in the past,
attracted federal and state financial support for rail infrastructure
improvements. The Company believes that it is a critical element of the
transportation infrastructure in many of its territories and that it enjoys
strong support from state and federal authorities. However, there can be no
assurance that such grants will be available in the future or that the Company
will continue to be able to obtain them.
COMPETITION. The Company's primary source of competition in its rail
operations comes from motor carriers. While the Company must build or acquire
and maintain its rail system, trucks are able to use public roadways. Any future
expenditures materially increasing the roadway system in the Company's present
or proposed areas of operation (or legislation granting materially greater
latitude for tracks with respect to size or weight limitations) could have a
material adverse effect on the Company's results of operations and financial
condition. In addition, the Company competes for domestic acquisition
opportunities with other short-line operators and for foreign acquisitions with
other U.S. and foreign regional rail operators. Some of these competitors have
significantly greater resources than the Company and may possess greater local
market knowledge as well.
SIGNIFICANT CAPITAL EXPENDITURES. The rail industry requires extensive
investment in connection with the maintenance and upkeep of tracks, locomotives
and other equipment. If the Company is unable to borrow sufficient funds or
raise additional equity capital, the resulting capital shortage could materially
limit the Company's growth and profitability.
RISKS RELATED TO CHILEAN OPERATIONS
DEPENDENCE ON CHILEAN ECONOMY. As a result of the Company's acquisition
of a majority interest in the stock of Ferronor, the Company's financial
condition and results of operations will be affected by and, to a certain
extent, dependent upon economic conditions prevailing from time to time in
Chile. There can be no assurance that the Chilean economy will grow in the
future or that future developments in the Chilean economy will not impair the
Company's ability to proceed with its strategy or its business, financial
condition or results of operations. The Company's financial condition and
results of operations could also be affected by changes in economic or other
policies of the Chilean Government or other political or economic developments
in Chile, as well as regulatory changes or administrative practices of Chilean
authorities.
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IMPACT OF INFLATION ON THE CHILEAN ECONOMY. Chile has experienced high
levels of inflation in the past decade even though the country has seen that
rate decrease since 1992. High levels of inflation in Chile could adversely
affect the Chilean economy. The rate of inflation as measured by changes in the
official consumer price index ("CPI") of the Instituto Nacional de Estadisticas
(which is the inflation index applicable for the presentation of financial
information) in 1992, 1993, 1994, 1995, 1996 and 1997 was 12.7%, 12.2%, 8.9%,
8.2%, 6.6% and 6.0%, respectively. The level of Chilean inflation may affect the
Company's financial condition and results of operations. There can be no
assurance that the performance of the Chilean economy or the operating results
of the Company will not be adversely affected by continuing or increased levels
of inflation or that Chilean inflation will not increase significantly from the
current level.
FOREIGN CURRENCY AND FOREIGN EXCHANGE REGULATION. The Chilean peso has
been subject to large nominal devaluations in the past and may be subject to
significant fluctuations in the future. In the three-year period ended December
31, 1995, the value of the Chilean peso relative to the US dollar depreciated
approximately 6.5% in nominal terms (without adjusting for inflation) based on
the observed exchange rates on December 31, 1992 and December 31, 1995, and
appreciated 19.5% in real terms (adjusting for inflation) based on the average
of the monthly average of the observed exchange rates for such period. In the
five-year period ended December 31, 1995, the value of the Chilean peso relative
to the US dollar declined approximately 20.7% in the nominal terms based on the
observed exchange rates on December 31, 1990 and December 31, 1995, and
appreciated 31.8% in real terms. Although most of Ferronor's anticipated
revenues from operations in Chile will be in US dollars, some percentage of
anticipated revenues will be in the form of the Chilean peso. As a result, the
Company will be subject to the risk that the value of the Chilean peso will
decline against the dollar. The Company may seek to limit its exposure to the
risk of currency fluctuations by engaging in hedging or other transactions,
which transactions could expose the Company to substantial risk of loss. The
Company has only limited experience in managing international transactions, and
has yet to formulate a strategy to protect the Company against currency
fluctuations, or retained a financial officer experienced in such transactions.
There can be no assurance that the Company will successfully manage its exposure
to currency fluctuations or that such fluctuations will not have a material
adverse effect on the Company.
DEPENDENCE ON CHILEAN MINING INDUSTRY. A substantial portion of
Ferronor's traffic consists of mined products, particularly copper and iron. As
a result, Ferronor's operations could be materially and adversely affected by
factors that generally affect the copper and iron mining industries in Chile.
Such factors include, without limitation, fluctuations in the prices of copper
and iron. As a result, the number of carloads handled by the Company and its
recognition of revenue from the operations of Ferronor may vary significantly
from period to period as a result of fluctuations in the price of those
commodities. See "--International Business Risks."
RISKS RELATED TO TRUCK TRAILER MANUFACTURING OPERATIONS
KALYN'S DEPENDENCE ON ONE TRUCK TRAILER MANUFACTURING SITE. Kalyn
operates one manufacturing facility which operates at approximately 80% of
capacity. Although the Company believes its manufacturing capacity could be
increased through the expansion of its manufacturing facility and/or the
addition of a partial second work shift, such capacity increases may increase
the marginal cost of producing truck trailers. Sustained growth of Kalyn's
production and, in turn, its net sales are dependent on its ability to increase
production efficiency. In the years ended December 31, 1996 and 1997, sales from
Kalyn accounted for 53% and 48%, respectively, of the Company's total revenues.
Although management expects that Kalyn will account for a smaller percentage of
revenues in the year ended December 31, 1998 relative to 1997 and 1996, a
long-term interruption in the operation of Kalyn's plant from labor strikes, a
natural disaster or other causes, whether or not covered by insurance, could
have a material adverse effect on the Company's business and results of
operations. The Company recently acquired a 45,000 square foot manufacturing
facility in Trois Riveres, Quebec, which manufactures lightweight, aluminum
specialty bulk-handling truck trailers used in the solid waste, agricultural and
constructions industries. See "THE COMPANY -- Kalyn." The Company's specialized
manufacturing operations at the Trois Riveres facility are not interchangeable
with its manufacturing operations at Kalyn's Texas facility.
DEPENDENCE ON GOVERNMENT PURCHASES. For the year ended December 31,
1997, approximately 37% of Kalyn's revenues were derived from sales of truck
trailers to U.S. governmental customers. The Company believes that if it
satisfies its current orders for truck trailers, sales to government agencies
could account for as much as 40% of its sales in 1998. The majority of Kalyn's
sales to governmental agencies are to the GSA, the purchasing arm of
non-military agencies, and to TACOM, a Department of Defense unit established to
consolidate purchases for various branches of the military. A substantial
decrease in orders for new trailers placed by the GSA and/or TACOM could have a
material adverse effect on Kalyn's business and results of operations.
DEPENDENCE ON INDUSTRY DEMAND FOR TRUCK TRAILERS; CYCLICAL BUSINESS.
Unit sales of new truck trailers have historically been subject to substantial
cyclical variation. Sales of new truck trailers have also historically been
subject to a five to seven-year replacement cycle. Periods of economic recession
in North America have historically caused declines in the profitability of the
trucking industry, have had a materially adverse effect on industry-wide demand
for new truck trailers and may have a materially adverse effect on the Company's
truck trailer manufacturing division's results of operations. Future economic
downturns or cyclical decreases in demand for truck trailers would likely have a
material adverse effect on this division of the Company.
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DEPENDENCE ON SUPPLIERS. The Company's ability to manufacture trailers
is dependent upon receiving supplies or components and raw materials from a
limited number of sources. If supplies are delayed, the Company's truck trailer
manufacturing division's production ability may be decreased, which could have a
negative effect on the Company's business and results of operations.
COMPETITION. The truck trailer manufacturing industry is highly
competitive and has relatively low barriers to entry. The Company competes with
a number of other trailer manufacturers, some of which are larger and have
greater financial resources than the Company. Furthermore, the Company's
products compete with alternative forms of shipping, such as inter-modal
containers. There can be no assurance that the Company will be able to continue
to compete effectively for existing or potential customers or with alternative
forms of shipping containers.
GOVERNMENTAL REGULATION OF TRUCKING INDUSTRY. Truck trailer length,
height, width, gross vehicle weight and other specifications are regulated
within the United States of America by the National Highway Traffic Safety
Administration and individual states within the United States of America and
within Canada by Transport Canada, and the individual Provinces of Canada.
Historically, changes and anticipated changes in these regulations have resulted
in significant fluctuations in demand for new trailers, thereby contributing to
the cyclicality of the industry. Changes or anticipation of changes in these
regulations would be likely to have a materially adverse impact on the Company's
truck trailer division's manufacturing operations and sales. In addition, the
Company's trailer manufacturing operations are subject to environmental laws
enforced by federal, state and local agencies.
OTHER RISKS
DEPENDENCE ON KEY PERSONNEL. The Company's success is dependent on
certain management and personnel, including Mr. Gary Marino, its Chairman,
President and Chief Executive Officer. The Company's success is also dependent
upon the efforts of Robert B. Coward, the Vice President and General Manager of
Kalyn. The loss of the services of one or more of these executives could have an
adverse effect upon the business of the Company. While the Company believes that
it would be able to locate suitable replacements for these executives if their
services were lost to the Company, there can be no assurance it would be able to
do so.
LIABILITY FOR CASUALTY LOSSES. The Company has obtained insurance
coverage for losses arising from personal injury and for property damage in the
event of derailments or other accidents or occurrences. While the Company
believes, based upon its experience, that its insurance coverage is adequate,
under catastrophic circumstances the Company's liability could exceed its
insurance limits. Insurance is available from only a very limited number of
insurers and there can be no assurance that insurance protection at the
Company's current levels will continue to be available or, if available, will be
obtainable on terms acceptable to the Company. The occurrence of losses or other
liabilities which are not covered by insurance or which exceed the Company's
insurance limits could materially adversely affect the Company's business and
results of operations.
ENVIRONMENTAL MATTERS. The Company's railroad operations and real
estate ownership are subject to extensive federal, state and local environmental
laws and regulations concerning, among other things, emissions to the air,
discharges to waters, and the handling, storage, transportation and disposal of
waste and other materials. While the Company believes it is in substantial
compliance with all such matters, any allegations or findings to the effect that
the Company had violated such laws or regulations could have a material adverse
effect on the Company's business and results of operations.
CERTAIN ANTI-TAKEOVER PROVISIONS. The Company's Amended and Restated
Certificate of Incorporation contains certain anti-takeover provisions that
could have the effect of making it more difficult for a third party to acquire,
or of discouraging a third party from attempting to acquire control of the
Company without negotiating with its Board of Directors. Such provisions could
limit the price that certain investors might be willing to pay in the future for
the Company's securities. Certain of such provisions provide for a classified
Board of Directors with staggered terms, and allow the Company to issue
preferred stock with rights senior to those of the common stock or impose
various procedural and other requirements which could make it more difficult for
stockholders to effect certain corporate actions.
In January 1998, the Company declared a dividend distribution of one
Common Stock Purchase Right (a "Right") on each outstanding share of the
Company's Common Stock pursuant to a Common Stock Purchase Rights Plan (the
"Plan") designed to prevent partial tender offers, squeeze-outs, open market
accumulations and other coercive or unfair tactics to gain control of the
Company. The Plan works by diluting the Common Stock of the Company held by a
potential acquirer or the common stock of an acquiring company. Under the Plan,
the Rights become exercisable ten business days following the acquisition of or
tender offer for 15% or more of the Company's Common Stock (or 10% in certain
circumstances). The Board of Directors of the Company may then exchange the
Rights, (except any Rights held by the acquiring party or group) into Common
Stock of the Company at a one-for-one ratio. The Rights are redeemable by the
Company's Board of Directors. While the Company believes that the Plan will
protect the rights of its stockholders by enabling them to realize the long-term
value of their investment in the Company, the Plan may have the effect of
discouraging potential acquisitions of the Company or large blocks of its Common
Stock.
DIVIDEND POLICY. The Company has never declared or paid a dividend on
its Common Stock, and management of the Company expects that a substantial
portion of the Company's future earnings will be retained for expansion or
development of the Company's business, which may include additional
acquisitions. Whether the Company will pay dividends in the future will be at
the discretion of the Company's Board of Directors and will depend upon, among
other things, future earnings, operations, capital requirements and surplus, the
general financial condition of the Company, restrictive covenants in loan or
other agreements to which the Company may be subject, and such other factors as
the Board of Directors may deem to be relevant, including the desirability of
cash dividends to stockholders.
-5-
<PAGE> 8
RISK OF SUBSTANTIAL LEVERAGE. As of December 31, 1997, on a
consolidated basis, the Company had approximately $47.8 million of senior
indebtedness and $3.5 million of subordinated indebtedness. It is expected that
the Company and its subsidiaries will incur additional indebtedness, including
increasing the borrowings under the Company's $40 million revolving credit loan
facility with the National Bank of Canada (the "Credit Facility"). The level of
the Company's indebtedness and its other obligations could have important
consequences to the Company including the following: (i) the ability of the
Company to obtain any necessary financing in the future for working capital,
capital expenditures, debt service requirements or other purposes may be
limited; (ii) any cash flow from the operations of certain of the Company's
subsidiaries may need to be dedicated to debt payments and might not be
available for other purposes; (iii) the Company's level of indebtedness could
limit its flexibility in planning for, or reacting to changes in its business;
and (iv) the Company's high degree of leverage of indebtedness will make it more
vulnerable to a downturn in its business.
SHARES ELIGIBLE FOR FUTURE SALE. On the date of this Prospectus, the
Company had 9,280,930 shares of Common Stock issued and outstanding and
2,538,398 shares of Common Stock reserved for issuance, including: (1) 444,440
shares of Common Stock reserved for issuance upon conversion of $1,000,000 in
principal amount of Convertible Subordinated Promissory Notes (conversion price
$2.25); (2) 364,961 shares of Common Stock reserved for issuance upon conversion
of $2,000,000 in principal amount of Series A Convertible Subordinated
Debentures (conversion price $5.48); (3) 50,000 shares of Common Stock reserved
for issuance upon exercise of options granted under the 1992 Stock Option Plan
(exercise price $3.50); (4) 362,500 shares of Common Stock reserved for issuance
upon the exercise of options granted to officers of the Company (exercise price
$3.10 - $5.00); (5) 497,900 and 390,500 shares of Common Stock reserved for
issuance upon exercise of options granted and yet to be granted, respectively,
under the 1995 Stock Incentive Plan (exercise price $3.50 - $3.625); (6) 160,000
and 40,000 shares of Common Stock reserved for issuance upon exercise of options
granted and yet to be granted, respectively, under the 1995 Non-Employee
Director Stock Option Plan (exercise price $3.50 - $4.81); (7) 208,659 shares of
Common Stock reserved for issuance upon exercise of options yet to be granted
under the 1995 Employee Stock Purchase Plan; and (8) 19,438 shares of Common
Stock reserved for issuance to certain key employees of Steel City. Of the
9,280,930 shares of Common Stock issued and outstanding, the Company believes
that approximately 8,800,000 of the shares are freely tradable without
restriction or further registration under the Securities Act, except for any
shares purchased by an "affiliate" of the Company (in general, a person who has
a control relationship with the Company). The Company believes the approximately
8,800,000 shares of Common Stock remaining are "restricted securities", as that
term is defined under Rule 144 promulgated under the Securities Act, and may be
resold thereafter in compliance with Rule 144. Of the 8,800,000 "restricted
securities," 131,550 are the subject of this Prospectus and such shares will no
longer be "restricted securities" upon the effectiveness of the registration
statement accompanying this Prospectus.
In general, under Rule 144, as recently amended, a person (or persons
whose shares are aggregated) including an affiliate, who has beneficially owned
such shares for one year, may sell in the open market within any three-month
period a number of shares that does not exceed the greater of (i) 1% of the then
outstanding shares of the Company's Common Stock or (ii) the average weekly
trading volume in the Common Stock in the over-the-counter market during the
four calendar weeks preceding such sale. Sales under Rule 144 are also subject
to certain limitations on the manner of sale, notice requirements and
availability of current public information about the Company. Pursuant to the
amendment, a person (or persons whose shares are aggregated) who is deemed not
to have been an "affiliate" of the Company at any time during the 90 days
preceding a sale by such person and who has beneficially owned such shares for
at least two years, will be able to sell such shares in the public market under
Rule 144(k) without regard to the volume limitations, manner of sale provisions,
notice requirements or availability of current information referred to above.
Restricted shares properly sold in reliance upon Rule 144 are thereafter freely
tradeable without restrictions or registration under the Act, unless thereafter
held by an "affiliate" of the Company.
The possibility that substantial amounts of Common Stock may be issued
and/or freely resold in the public market may adversely affect prevailing market
prices for the Common Stock and could impair the Company's ability to raise
capital through the sale of its equity securities.
-6-
<PAGE> 9
THE COMPANY
The Company is a leading operator of short line freight railroads in
the United States, based on total track miles, and an operator of a major
regional freight railroad in the Republic of Chile. The Company has grown
rapidly through acquisitions since December 31, 1994, at which time it operated
only 300 miles of track. The Company currently operates over 2,400 miles of rail
lines, with over 1,000 miles in the United States and over 1,400 miles in Chile.
Although the Company's core business is the acquisition and operation of short
line and regional railroads, it is also a leading manufacturer of specialized
truck trailers through its wholly-owned subsidiary, Kalyn/Siebert, Inc.
("Kalyn").
The Company plans to continue to acquire short line railroads in North
America from larger Class I railroads and from other short line railroad
operators, as well as to examine opportunities to acquire regional railroads in
North America. The Company also continues to evaluate opportunities to acquire
regional railroads in foreign markets that are being privatized by foreign
governments. Since industry deregulation in 1980, major North American railroads
have streamlined their operations by systematically divesting themselves of
branch lines to short line rail operators that have advantageous cost structures
mainly due to greater labor flexibility associated with non-unionized work
forces. The divestiture activity has accelerated in recent years as a result of
the consolidation among Class I railroads, which has led to the disposition of
redundant and light-density routes. Similarly, an increasing number of foreign
governments are seeking to encourage private investment in infrastructure and
stimulate economic activity by privatizing their national rail systems through
sale or by concession to qualified operators.
The Company believes that it is well-positioned to take advantage of
the opportunities emerging in the international rail industry. The Company has
developed a disciplined acquisition evaluation program identifying rail
properties that can be acquired on attractive terms and that can be improved by
the implementation of the Company's operating practices. These practices focus
on raising customer service levels, increasing rail traffic and reducing
expenses. As a result, the Company has achieved operating ratios that are
significantly lower and internal traffic growth rates that are significantly
higher than those prevailing in the industry. The Company believes that it has
become a desirable partner for Class I railroads as a result of its ability to
pursue and consummate acquisitions swiftly and increase traffic on lines that
interchange with those of the seller.
KALYN
The Company's trailer manufacturing operations are conducted through
its wholly-owned subsidiary, Kalyn. The Company purchased Kalyn in August 1994
for $7.3 million as part of its previously abandoned strategy to become a
diversified provider of transportation services and equipment. Kalyn
manufactures specialty and custom truck trailers for U.S. governmental and
commercial customers. Kalyn's profitability margins exceed those of commodity or
stock trailers because its trailers are designed or modified to meet customer
specifications. Inventory levels are relatively low because trailers are
manufactured only after receipt of confirmed purchase orders.
In January 1998, Kalyn acquired all of the outstanding stock of
Canadian trailer manufacturer Fabrex, Inc., and its affiliate Services Remorques
Plus, Inc. (collectively "Fabrex"). Fabrex is a manufacturer of lightweight
aluminum specialty bulk-handling truck trailers used in the solid waste,
agricultural and construction industries. Fabrex, which was founded in 1985,
employs 50 people in its 45,000 square foot manufacturing facility located in
Trois Revieres, Quebec.
FERRONOR
In February 1997, the Company, through its wholly-owned subsidiary
RailAmerica de Chile S.A., acquired a 55% interest in Empresa de Transporte
Ferroviario, S.A. ("Ferronor"), a 1,400 mile regional rail line serving northern
Chile, for approximately $7.0 million. The railroad serves important mining
interests in northern Chile and hauls more than 60,000 carloads, or 3,000,000
tons annually, of iron ore, copper concentrate, copper anodes, nitrates,
limestone, cement and chemicals. Ferronor also provides access to Pacific coast
ports for the northern Chile mining interests and international traffic from
Argentina and Bolivia. Ferronor has also entered into a new 20-year take-or-pay
agreement with CMH, a large Chilean mining company. The contract outlines the
terms for the transport of approximately 5.2 million tons of iron pellets
annually, commencing July 1998. The contract guarantees a minimum of 4.0 million
tons per year at a rate of $1.45/ton. The contract has escalators based on
general inflation rates and the cost of fuel. The Company expects the contract
to yield a minimum of $8.6 million per year in additional revenue. Revenues for
Ferronor for the ten-month period from acquisition to December 31, 1997 was $8.1
million.
-7-
<PAGE> 10
AUSTRALIAN ACQUISITION
In August 1997, a consortium in which the Company has a minority
participation, was awarded the passenger rail concession for three interstate
passenger rail lines by the Australian National Railway Commission for a payment
of approximately $12.0 million. The award took place in the context of the
commencement of the first of three railroads expected to be privatized by the
Australian government. The acquired rail lines extend over 4,000 miles and, in
1996, carried 244,000 passengers and generated approximately $33.0 million in
revenue. The Company intends to use its position in the consortium to supply
locomotive power for the consortium's passenger operations and other
non-affiliated freight operations. The Company believes that its participation
in the consortium has positioned itself to participate in further rail freight
privatizations expected to take place in Australia over the next several years.
RAIL ASSET SALES
The Company recently sold a substantial portion of the assets of its
Evansville Terminal for $500,000 to a group of investors which included a
company owned by the Company's Vice Chairman, producing a gain of $10,000. The
Company has also sold substantially all of the assets of the Gettysburg Railway
and all of the common stock of Gettysburg Scenic Rail Tours, Inc. for $1.95
million to a company owned by the Company's Vice Chairman, producing a gain of
approximately $0.4 million. The Company decided to rationalize these assets
after it determined that the present value of its expected future returns was
less than could be generated by immediate sales. In total, the above assets
produced approximately $1.0 million of revenues and were marginally profitable.
The Company's principal executive offices are located at 301 Yamato
Road, Suite 1190, Boca Raton, Florida 33431 and its telephone number is (561)
994-6015.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of any
of the Securities being offered by Selling Securityholders hereunder.
Expenses expected to be incurred by the Company in connection with this
offering are estimated to be approximately $25,000.
SELLING SECURITYHOLDERS
Of the 131,550 shares of Common Stock offered hereby, 81,550 are
issuable to assignees and affiliates of Josephthal & Co. Inc. ("Josephthal"),
upon the exercise of options (the "Options") issued to Josephthal and certain of
its affiliates in connection with their corporate finance consulting and
financial advisory services performed on behalf of the Company pursuant to an
agreement of the parties dated February 22, 1993, and 50,000 are issuable to
officers or directors of the Company upon exercise of Options issued to them as
compensation for their services to the Company.
Except for Mr. Jack Conser, a Senior Vice President of the Company, and
Mr. John Sullivan, a director of the Company, none of the Selling
Securityholders have been officers, directors, or employees, or have had a
material relationship with the Company.
The following table sets forth certain information with respect to the
amount of Securities beneficially owned by the Selling Securityholders and is
adjusted to reflect the sale of Securities offered hereby. The following table
assumes that each of the Selling Securityholders; (i) exercises all of his or
her Options; and (ii) sells all of his or her Securities.
-8-
<PAGE> 11
<TABLE>
<CAPTION>
OWNERSHIP OF SHARES NUMBER OWNERSHIP OF SHARES
SELLING OF COMMON STOCK OF SECURITIES OF COMMON STOCK
STOCKHOLDER PRIOR TO OFFERING OFFERED HEREBY AFTER OFFERING**
- --------------------------- --------------------- -------------- --------------------------
SHARES PERCENTAGE SHARES PERCENTAGE
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Alan L. Jacobs............. 27,500 * 27,500 0 0
Dan Purjes................. 34,405 * 34,405 0 0
Michael Loew............... 1,550 * 1,550 0 0
Charles Roden.............. 3,515 * 3,515 0 0
Lawrence Rice.............. 4,670 * 4,670 0 0
Matthew Balk............... 3,630 * 3,630 0 0
Paul Fitzgerald............ 340 * 340 0 0
Scott Weisman.............. 415 * 415 0 0
Estate of Peter Sheib...... 5,525 * 5,525 0 0
Jack Conser (1)............ 30,200 * 10,000 20,200 (2) *
John Sullivan (3).......... 41,000 * 40,000 1,000 (4) *
</TABLE>
- ---------------------------
* Indicates less than 1%
** Assumes all of the Securities registered hereby are sold.
(1) Mr. Conser is a Senior Vice President of the Company.
(2) Includes 20,000 options presently exercisable and 200 shares of Common Stock
of the Company beneficially owned by Mr. Conser.
(3) Mr. Sullivan is a Director of the Company, and has served in such capacity
since 1992.
(4) Includes 1,000 shares of Common Stock of the Company beneficially owned by
Mr. Sullivan.
PLAN OF DISTRIBUTION
The Selling Securityholders have advised the Company that they may from
time to time sell all or part of the Securities in one or more transactions
(which may involve block transactions) in the over-the-counter market, on The
Nasdaq National Market (or any exchange on which the Securities may then be
listed), in negotiated transactions, through the writing of options on the
Securities (whether such options are listed on an options exchange or
otherwise), or a combination of such methods of sale, at market prices
prevailing at the time of such sales or at negotiated prices. The Selling
Securityholders may effect such transactions by selling the Securities to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of underwriting discounts, concessions or commissions from the Selling
Securityholders and/or purchasers of the Securities for whom they may act as
agent (which compensation may be in excess of customary commissions). The
Selling Securityholders may also pledge the Securities as collateral for margin
accounts or loans and the Securities could be resold pursuant to the terms of
such accounts or loans. In connection with such sales, the Selling
Securityholders and any participating brokers and dealers may be deemed to be
"underwriters" as defined in the Securities Act. Neither the Company nor the
Selling Securityholders can presently estimate the amount of commissions or
discounts, if any, that will be paid by the Selling Securityholders in
connection with the sale of the Securities from time to time. In addition to
sales under the Registration Statement, Securities may be sold by the Selling
Securityholders through an applicable exemption from registration, including,
without limitation, pursuant to Rule 144 under the Securities Act.
The Company has been advised by the Selling Securityholders that they
have not, as of the date of this Prospectus, entered into any arrangement with a
broker-dealer for the sale of the Securities.
The Company will pay all the expenses, estimated to be approximately
$25,000, in connection with this offering, other than underwriting and brokerage
commissions, discounts, fees and counsel fees and expenses incurred by the
Selling Securityholders.
Under the securities laws of certain states, the Securities may be sold
in such states only through registered or licensed brokers or dealers. In
addition, in certain states the Securities may not be sold unless the Securities
have been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
The Company has agreed to indemnify the Selling Securityholders and any
underwriters against certain liabilities, including liabilities under the
Securities Act. The Selling Securityholders have also agreed to indemnify the
Company, its directors, officers, agents and representatives against certain
liabilities, including liabilities under the Securities Act.
-9-
<PAGE> 12
The Selling Securityholders and other persons participating in the
distribution of the Securities offered hereby are subject to the applicable
requirements of Rule 10b-6 (as amended by Regulation M) promulgated under the
Exchange Act in connection with the sale of the Securities.
LEGAL MATTERS
The validity of the issuance of the Securities offered hereby has been
passed upon for the Company by Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A., Miami, Florida.
EXPERTS
The financial statements of the Company and its consolidated
subsidiaries as of December 31, 1996 and 1995, and for each of the years in the
two-year period ended December 31, 1996, have been incorporated by reference in
this prospectus and registration statement from the Company's Annual Report on
Form 10-KSB/A in reliance upon the report of Coopers & Lybrand L.L.P,
independent certified public accountants, which is incorporated herein by
reference, and upon the authority of said firm as experts in accounting and
auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has authority under Section 145 of the Delaware General
Corporation Law to indemnify its directors and officers to the extent provided
for in such statute. The Company's Certificate of Incorporation provides for
indemnification of the Company's officers and directors to the fullest extent
permitted under the Delaware General Corporation Law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
-10-
<PAGE> 13
<TABLE>
<CAPTION>
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<S> <C>
NO DEALER, SALESPERSON OR ANY OTHER PERSON IS 131,550 SHARES
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OF
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION COMMON STOCK
OF AN OFFER TO BUY, BY ANY PERSON IN ANY JURISDICTION
IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
RAILAMERICA, INC.
--------------------------
PROSPECTUS
--------------------------
--------------------
TABLE OF CONTENTS
PAGE
Available Information...............................1
Incorporation of Certain Information by Reference...1
Risk Factors........................................2
The Company.........................................7
Use of Proceeds.....................................8
Selling Securityholders.............................8
Plan of Distribution................................9
Legal Matters......................................10
Experts............................................10
Indemnification of Directors and Officers..........10
March 18, 1998
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</TABLE>
