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As filed with the Securities and Exchange Commission on April 22, 1999
Registration No. 333-
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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.
(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:
FERN S. WATTS, ESQ.
GREENBERG TRAURIG, 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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PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
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Common Stock, $.001 par value.......................... 1,547,999 $8.25 $12,770,992 $3,551
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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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PROSPECTUS
RAILAMERICA, INC.
1,547,999 SHARES OF COMMON STOCK
The selling shareholders are offering 1,547,999 shares of our common
stock under this prospectus. The selling shareholders may obtain their shares of
common stock upon conversion of shares of our Series A Convertible Redeemable
Preferred Stock purchased by them in our private placement completed in January
1999. Additionally, 140,727 shares of our common stock will be obtained upon
exercise of warrants issued to our placement agent in our January 1999 private
placement.
Our common stock trades on the Nasdaq National Market under the symbol
"RAIL." On April 19, 1999, the closing sale price of one share of common stock
on the Nasdaq National Market was $10.125.
The selling shareholders may offer the shares through public or private
transactions, on or off the Nasdaq National Market, at prevailing market prices
or at privately negotiated prices. They may make sales directly to purchasers or
through agents, dealers or underwriters.
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YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 4 IN
THIS PROSPECTUS.
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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 April 22, 1999.
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THE COMPANY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION AND DOES NOT CONTAIN ALL
THE INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD CAREFULLY READ THIS
PROSPECTUS AND THE DOCUMENTS WE HAVE REFERRED YOU TO IN "WHERE YOU CAN FIND MORE
INFORMATION" ON PAGE 4 FOR INFORMATION ABOUT OUR COMPANY AND OUR FINANCIAL
STATEMENTS.
We are 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. We have grown rapidly through acquisitions
since December 31, 1994, at which time we operated only 300 miles of track. We
currently operate over 2,400 miles of rail lines, with over 1,000 miles in the
United States and over 1,400 miles in Chile. Although our core business is the
acquisition and operation of short line and regional railroads, we are also a
leading manufacturer of specialized truck trailers through our wholly-owned
subsidiary, Kalyn/Siebert, Inc. Our revenues and net income increased to
approximately $77.1 million and $4.4 million, respectively, in the year ended
December 31, 1998 from approximately $47.4 million and $1.9 million,
respectively, in the year ended December 31, 1997 and approximately $25.7
million and $504,000, respectively, in the year ended December 31, 1996.
We plan to continue to acquire short line railroads in North America
from Class I railroads and from other short line railroad operators, as well as
to examine opportunities to acquire regional railroads in North America. We also
continue 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.
We believe that we are well-positioned to take advantage of the
opportunities emerging in the international rail industry. We have 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 our operating practices. These practices focus on raising customer service
levels, increasing rail traffic and reducing expenses. As a result, we have
achieved operating ratios that are significantly lower and internal traffic
growth rates that are significantly higher than those prevailing in the
industry. We believe that we have become a desirable partner for Class I
railroads as a result of our ability to pursue and consummate acquisitions
swiftly and increase traffic on lines that interchange with those of the seller.
RECENT EVENTS
PRIVATE PLACEMENT OF SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK.
In January 1999, we completed a private placement of an aggregate of
464,400 shares of our Series A Preferred Stock at $25.00 per share. We received
net proceeds of $ 10.8 million from the sale of Series A Preferred Stock after
deduction of commissions and fees. The Series A Preferred Stock is convertible
at the option of the stockholder into shares of our common stock, at conversion
price of $ 8.25 per share. The shares of our common stock issuable upon
conversion of the Series A Preferred Stock are the shares of common stock being
offered by the selling shareholders.
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PRIVATE PLACEMENT OF COMMON STOCK AND WARRANTS.
In March 1999, we completed a private placement of an aggregate of 1.4
million shares of our common stock at $8.8125 per share, and 210,000 warrants to
purchase an equivalent number of shares of common stock at a price of $10.125
per share within one year of the closing. We received net proceeds of
approximately $12.0 million from the sale of common stock after deduction of
commissions and fees. We plan to use the proceeds primarily to help fund our
proposed equity investment in Freight Victoria, the entity that intends to
acquire Australia's V/Line Freight corporation railroad.
AUSTRALIAN OPERATIONS
In February 1999, a consortium in which we are expected to be a
majority partner was selected as the successful bidder for V/Line Freight
Corporation, the rail freight business of Australia's Victorian Government. The
rail line in Victoria, Australia consists of approximately 3,000 miles of track.
CANADIAN RAIL ACQUISITION
In January 1999, through a newly-formed subsidiary, Esquilmalt and
Nanaimo Railway Company (E&N), we acquired and/or leased a 181-mile rail line in
British Columbia, Canada. E&N provides freight and passenger rail service
between Victoria and Courtenay, and freight service between Port Alberni and
Nanaimo, on British Columbia's Vancouver Island.
KALYN
Our trailer manufacturing operations are conducted through our
wholly-owned subsidiary, Kalyn. We purchased Kalyn in August 1994 for $7.3
million. 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., which are collectively referred to in this prospectus as "Fabrex".
Fabrex, a manufacturer of lightweight aluminum specialty bulk-handling truck
trailers used in the solid waste, agricultural and construction industries, was
founded in 1985. Fabrex's operations have been combined into Kalyn/Siebert
Canada, Inc., a wholly-owned subsidiary of Kalyn. Kalyn/Seibert Canada employs
approximately 120 people in its 150,000 square foot manufacturing facility
located in Trois Revieres, Quebec.
FERRONOR
In February 1997, through our wholly-owned subsidiary RailAmerica de
Chile S.A., we acquired a 55% interest in Empresa de Transporte Ferroviario,
S.A., or Ferronor, a 1,400 mile regional rail line serving northern Chile, for
approximately $7 million. The railroad serves important mining interests in
northern Chile and annually hauls more than approximately 70,000 carloads, or
more than 6,000,000 tons, of iron ore, copper concentrate, copper anodes,
nitrates, limestone, cement and chemicals. Ferronor 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. We expect 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 were $8.1
million, and for the year ended December 31, 1998, were $15.9 million.
AUSTRALIAN ACQUISITION
In August 1997, a consortium in which we have a minority participation
of approximately 11% 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 acquired rail lines extend
over 4,000 miles and
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during the year ended December 31, 1998, carried approximately 200,000
passengers and generated approximately $29 million in revenue. We believe that
our participation in the consortium has allowed us to position ourselves to
participate in further rail freight privatizations expected to take place in
Australia over the next several years.
In February 1999, a consortium in which we are expected to be a
majority partner was selected as the successful bidder for V/Line Freight
Corporation, the rail freight business of Australia's Victorian Government. The
rail line in Victoria, Australia consists of approximately 3,000 miles of track.
OUR GROWTH STRATEGY
Our objective is to become a premium operator of short line and
regional railroads through the implementation of the following growth strategy:
o NORTH AMERICAN ACQUISITIONS. We plan to continue to acquire
short line and regional railroads that become available as a
result of the rationalizations and divestitures in North
America, especially in geographic regions where we can
"cluster" a number of acquired rail lines to achieve economies
of scale.
o INTERNATIONAL ACQUISITIONS. We plan to acquire additional
foreign regional railroads that become available as a result
of governmental privatization, primarily through joint
ventures with local partners familiar with market conditions
in the region. International rail acquisitions often offer us
better growth opportunities due to historical operating
inefficiencies typical of government entities.
o EXPANSION OF MANUFACTURING OPERATIONS. We plan to acquire
additional specialized truck trailer manufacturing companies
as they become available.
o FOCUSED SALES AND MARKETING. We continue to increase traffic
from existing, former and new customers in each of our markets
through the aggressive marketing of our enhanced customer
service, re-negotiation of rates where prudent and
implementation of other incentive arrangements for shippers.
Once we reestablish frequent service for a newly acquired
railroad, we market our newly restored service to existing
customers as well as to customers who may have dropped service
when the former owner had operational control.
o OPERATING EFFICIENCY. We improve our operating efficiency
through rationalized staffing, incentivized local management
and staff, centralized purchasing and corporate services,
efficient equipment utilization and outsourced maintenance.
We acquire rail properties by purchase of assets, lease or operating
contract. Typically, we bid against other short line and regional operators for
available properties. The structure of each transaction is determined by the
seller based upon economic and strategic considerations. In addition to the
financial terms of the transaction, we believe sellers generally consider more
subjective criteria such as a prospective acquirer's operating experience, our
reputation among shippers, and our ability to close a transaction and commence
operations smoothly. We believe we have established an excellent record in each
of these areas. In addition, by growing revenues on our acquired lines and
providing improved service to shippers, we are able to provide increased revenue
to the Class I carriers that connect with its lines. We see this ability to
provide increased revenue to Class I carriers as an advantage in bidding for
properties.
Our principal executive offices are located at 301 Yamato Road, Suite
1190, Boca Raton, Florida 33431 and our telephone number is (561) 994-6015.
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RISK FACTORS
IN ADDITION TO THE INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS
OR INCORPORATED IN THIS PROSPECTUS BY REFERENCE, YOU SHOULD CONSIDER CAREFULLY
THE FOLLOWING RISK FACTORS.
RISKS RELATED TO OUR BUSINESS OPERATIONS
WE DEPEND ON CLASS I RAILROADS FOR OUR BUSINESS. IF OUR RELATIONSHIPS
WITH CLASS I RAILROADS DETERIORATE, OUR BUSINESS AND FINANCIAL RESULTS
MAY BE ADVERSELY AFFECTED.
The railroad industry in the United States is dominated by a small
number of Class I carriers that have substantial market control and negotiating
leverage. Almost all of the traffic on our domestic railroads is interchanged
with Class I carriers. A decision by any of these Class I carriers to
discontinue transporting commodities or to use alternate modes of
transportation, such as motor carriers, could adversely affect our business and
results of operations. Our ability to provide rail service to our customers
depends in large part upon our 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 our relationship with our connecting carriers, would adversely
affect our business. In addition, much of the freight transported by our
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. Furthermore, were these carriers to reduce
the number of railcars available for use by our railroads, we might not be able
to obtain replacement railcars on favorable terms.
Portions of our rail properties are operated under leases, operating
agreements or trackage rights agreements with Class I carriers. Failure of our
railroads to comply with these 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 our results of operations and financial
condition. In addition, traditionally Class I carriers also have been
significant sources of business for us, 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 these factors, a
deterioration of our relationships with Class I carriers would have a material
adverse effect on our results of operations and financial condition.
WE DEPEND ON THE AGRICULTURAL INDUSTRY. OUR BUSINESS MAY BE ADVERSELY
AFFECTED BY NEGATIVE CONDITIONS IN THE AGRICULTURAL INDUSTRY.
A substantial portion of our traffic consists of agricultural
commodities. As a result, factors that generally affect the agricultural
industry in the regions in which we operate could have a material adverse effect
on our results of operations and financial condition. These factors include
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 that we handle
and our 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 being shipped from September
through May. As a result, our revenues from these shipments will normally be
higher during these months than during the summer months. We believe that
agricultural commodities will continue to represent a principal component of our
rail traffic base in the near future.
OUR GROWTH STRATEGY PARTIALLY DEPENDS ON ACQUISITIONS. IF WE ARE UNABLE
TO ACQUIRE BUSINESSES ON FAVORABLE TERMS OR SUCCESSFULLY INTEGRATE AND
MANAGE THE BUSINESSES ACQUIRED, OUR BUSINESS AND FINANCIAL RESULTS MAY
BE ADVERSELY AFFECTED.
We have experienced significant growth in revenues, primarily through
the completion of acquisitions. We plan to continue to acquire short line
railroads in North America from Class I railroads and from other short line
railroad operators, as well as to examine opportunities to acquire regional
railroads in North America. We also plan to continue to evaluate opportunities
to acquire regional railroads in foreign markets that are being privatized by
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foreign governments. 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 risks, including the
following:
o diversion of management's attention to the assimilation of
operations and personnel of the acquired companies;
o the difficulty of integrating acquired companies into our
management information and financial reporting systems;
o possible adverse short-term effects on our operating results
and an adverse impact on earnings from the amortization of
acquired intangible assets; and
o if financed with equity, potential per share dilution to
existing stockholders.
There can be no assurance that we will be able to find, finance and
complete further suitable acquisitions on terms acceptable to us, that we will
be able to integrate effectively any acquisitions made, that the businesses
acquired can be operated profitably, or that we can assimilate the operations of
such businesses into our own operations.
WE ARE SUBJECT TO THE RISKS OF DOING BUSINESS IN FOREIGN COUNTRIES.
We have railroad operations in Chile and Australia. The risks of doing
business in foreign countries include:
o potential adverse changes in the diplomatic relations of
foreign countries with the United States;
o hostility from local populations;
o adverse effects of currency exchange controls;
o restrictions on the withdrawal of foreign investment and
earnings;
o government policies against ownership of businesses by
non-nationals;
o expropriations of property;
o the potential instability of foreign governments; and
o the risk of insurrections that could result in loses against
which we are not insured.
Our 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.
WE ARE SUBJECT TO GOVERNMENTAL REGULATION OF RAILROAD OPERATIONS. THE
FAILURE TO COMPLY WITH GOVERNMENTAL REGULATION COULD HAVE A MATERIAL
ADVERSE EFFECT ON US.
We are subject to governmental regulation by the Surface Transportation
Board, the Federal Railroad Administration and other federal, state and local
regulatory authorities with respect to our rates and railroad operations, as
well as a variety of health, safety, labor, environmental and other matters, all
of which could potentially adversely affect our competitive position and
profitability. All U.S. railroad industry employees are covered by the Railroad
Retirement Act and the Railroad Unemployment Insurance Act in lieu of Social
Security
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and other federal and state unemployment insurance programs. Employer
contributions under the Railroad Retirement Act are currently about triple those
required under Social Security. We believe that the regulatory freedoms granted
by the Staggers Rail Act have been beneficial to us by giving us flexibility to
adjust prices and operations to respond to market forces and industry changes.
However, various interests, and some 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 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 us.
In addition, we are subject to foreign laws and regulations in the
foreign countries in which we operate. Our failure to comply with applicable
laws and regulations could have a material adverse effect on us.
WE DEPEND ON GOVERNMENT GRANTS.
We have, in the past, attracted federal and state financial support for
rail infrastructure improvements. We believe that this support is an important
element of the transportation infrastructure in many of our territories. There
can be no assurance, however, that these grants will be available in the future
or that we will continue to be able to obtain them.
WE FACE COMPETITION FROM OTHER TYPES OF TRANSPORTATION.
Our primary source of competition in our rail operations comes from
motor carriers. While we must build or acquire and maintain our rail system,
trucks are able to use public roadways. Any future expenditures materially
increasing the roadway system in our present or proposed areas of operation, or
legislation granting materially greater latitude for trucks with respect to size
or weight limitations, could have a material adverse effect on our results of
operations and financial condition. In addition, we compete 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 we do and may possess
greater local market knowledge as well.
WE ARE REQUIRED TO MAKE SIGNIFICANT CAPITAL EXPENDITURES.
The rail industry requires extensive investment in connection with the
maintenance and upkeep of tracks, locomotives and other equipment. If we are
unable to borrow sufficient funds or raise additional equity capital, the
resulting capital shortage could materially limit our growth and profitability.
WE FACE RISKS RELATED TO YEAR 2000 COMPLIANCE, FOR WHICH WE MAY NOT BE
PREPARED.
The "Year 2000 Issue" is the result of computer programs that were
written using two digits rather than four to define the applicable year. If our
computer programs with date-sensitive functions are not Year 2000 compliant,
they may recognize a date "00" as the Year 1900 rather than the Year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, inability to interchange information with connecting railroads
or engage in similar normal business activities.
Many of our systems and related software are currently Year 2000
compliant and we have a program in place designed to bring the remaining
software and systems into Year 2000 compliance in time to minimize any
significant detrimental affect on operations. We are utilizing internal
personnel and outside vendors to identify Year 2000 problems, modify and/or
update programs and hardware and test the modifications.
We rely on third parties, particularly the Class I railroads, for much
of our information in our domestic rail operations. In addition, our trailer
manufacturing segment relies heavily on third party suppliers for its raw
materials. We have initiated efforts to evaluate the status of these suppliers'
efforts and to determine alternatives and contingency plan requirements. An
inability of a connecting railroad to process information could cause delays in
services to customers and could impede our ability to invoice and collect on
shipments. Failure of a third party supplier to deliver materials to our
manufacturing facilities could cause either a slow down in production and/or a
temporary shut down of the facility.
The total costs associated with required modifications to become Year
2000 compliant is not expected to be material to our financial position. The
estimated total cost of the Year 2000 Project is approximately $0.25 million.
The total amount expended through December 31, 1998 was approximately $0.2
million.
The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect our results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, resulting in part from the uncertainty of
the Year 2000 readiness of third party suppliers and customers, we are unable
to determine at this time whether the consequences of Year 2000 failures will
have a material impact on our results of operations, liquidity or financial
condition. We believe that, with the implementation of new business systems and
completion of the program as scheduled, the possibility of significant
interruptions of normal operations should be minimized.
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RISKS RELATED TO CHILEAN OPERATIONS
WE ARE DEPENDANT ON THE ECONOMY OF CHILE. CHANGES IN THE CHILEAN
ECONOMY COULD ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL RESULTS.
As a result of our acquisition of a majority of the capital stock of
Ferronor, our 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 our ability to proceed with our strategy. Our financial condition and
results of operations could also be adversely 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.
WE ARE AFFECTED BY INFLATION ON THE CHILEAN ECONOMY WHICH MAY ADVERSELY
AFFECT US.
Chile has experienced high levels of inflation in the past decade,
though that rate has decreased each year 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 of the Instituto
Nacional de Estadisticas, 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 our financial condition and results of operations. There can be no
assurance that the performance of the Chilean economy or our operating results
will not be adversely affected by continuing or increased levels of inflation or
that Chilean inflation will not increase significantly from the current level.
WE ARE AFFECTED BY 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. Although most
of Ferronor's anticipated revenues from operations in Chile will be in U.S.
dollars or indexed to U.S. dollars, some percentage of such revenues will be in
the form of the Chilean peso. As a result, we will be subject to the risk that
the value of the Chilean peso will decline against the dollar. We may seek to
limit our exposure to the risk of currency fluctuations by engaging in hedging
or other transactions, which transactions could expose us to substantial risk of
loss. We have only limited experience in managing international transactions,
and have yet to formulate a strategy to protect us against currency
fluctuations, or retained a financial officer experienced in such transactions.
There can be no assurance that we will successfully manage our exposure to
currency fluctuations or that these fluctuations will not have a material
adverse effect on us.
WE ARE DEPENDANT ON THE CHILEAN MINING INDUSTRY.
A substantial portion of Ferronor's traffic consists of mined products,
particularly limestone and iron. As a result, Ferronor's operations could be
materially and adversely affected by factors that generally affect the limestone
and iron mining industries in Chile. Such factors include, without limitation,
fluctuations in the prices of limestone and iron. As a result, the number of
carloads that we handle and our 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.
RISKS RELATED TO KALYN
WE DEPEND ON TWO TRUCK TRAILER MANUFACTURING SITES.
Our subsidiary, Kalyn, operates two manufacturing facilities in Texas
and Canada which operate at approximately 80% and 50% of their respective
capacities. Although we believe that our manufacturing capacity could be
increased through the expansion of our manufacturing facilities and/or the
addition of a partial second work shift, these 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
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years ended December 31, 1996, 1997 and 1998, sales from Kalyn accounted for
53%, 48% and 52%, respectively, of our total revenues. A long-term interruption
in the operation of Kalyn's plants from labor strikes, a natural disaster or
other causes, whether or not covered by insurance, could have a material adverse
effect on our business and results of operations.
WE DEPEND ON GOVERNMENT PURCHASES.
For the years ended December 31, 1997 and 1998, approximately 37% and
35%, respectively, of Kalyn's revenues were derived from sales of truck trailers
to U.S. governmental customers. 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.
WE DEPEND ON INDUSTRY DEMAND FOR TRUCK TRAILERS, WHICH IS A 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 the United States have historically caused declines in the
profitability of the trucking industry, have had a material adverse effect on
industry-wide demand for new truck trailers and may have a material adverse
effect on Kalyn's results of operations. Future economic downturns or cyclical
decreases in demand for truck trailers would likely have a material adverse
effect on Kalyn.
WE ARE DEPENDANT ON A LIMITED NUMBER OF SUPPLIERS.
Kalyn's ability to manufacture trailers is dependent upon receiving
supplies, components and raw materials from a limited number of sources. If
supplies are delayed, Kalyn's production ability may be decreased, which could
have a negative effect on our business and results of operations.
WE FACE COMPETITION IN THE TRUCK TRAILER INDUSTRY.
The truck trailer manufacturing industry is highly competitive and has
relatively low barriers to entry. Kalyn competes with a number of other trailer
manufacturers, some of which are larger and have greater financial resources
than Kalyn. Furthermore, Kalyn's products compete with alternative forms of
shipping, such as inter-modal containers. There can be no assurance that Kalyn
will be able to continue to compete effectively for existing or potential
customers or with alternative forms of shipping containers.
WE ARE SUBJECT TO GOVERNMENTAL REGULATION OF THE TRUCKING INDUSTRY.
Truck trailer length, height, width, gross vehicle weight and other
specifications are regulated within the United States by the National Highway
Traffic Safety Administration and individual states within the United States 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 material adverse impact on Kalyn's
manufacturing operations and sales. In addition, our trailer manufacturing
operations are subject to environmental laws enforced by federal, state and
local agencies.
OTHER RISKS
WE DEPEND ON KEY PERSONNEL.
Our success is dependent on our key management personnel, including Mr.
Gary Marino, our Chairman, President and Chief Executive Officer. Our success is
also dependent upon the efforts of Robert B. Coward, the
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<PAGE> 11
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 our business. While
we believe that we would be able to locate suitable replacements for these
executives if their services were lost, there can be no assurance we would be
able to do so.
WE MAY FACE LIABILITY FOR CASUALTY LOSSES WHICH ARE NOT COVERED BY
INSURANCE.
We have obtained insurance coverage for losses arising from personal
injury and for property damage in the event of derailments or other accidents or
occurrences. While we believe, based upon our experience, that our insurance
coverage is adequate, under catastrophic circumstances our liability could
exceed our insurance limits. Insurance is available from a limited number of
insurers and there can be no assurance that insurance protection at our current
levels will continue to be available or, if available, will be obtainable on
terms acceptable to us. The occurrence of losses or other liabilities which are
not covered by insurance or which exceed our insurance limits could materially
adversely affect our business and results of operations.
WE ARE SUBJECT TO ENVIRONMENTAL LAWS AND REGULATIONS.
Our 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 we believe we are in substantial compliance with all such matters, any
allegations or findings to the effect that we had violated such laws or
regulations could have a material adverse effect on our business and results of
operations.
OUR CORPORATE CHARTER CONTAINS ANTI-TAKEOVER PROVISIONS.
Our Amended and Restated Certificate of Incorporation contains
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 us without negotiating with our Board of Directors. These
provisions could limit the price that investors might be willing to pay in the
future for our securities. These provisions provide:
o that we have a classified Board of Directors with staggered
terms, and
o that we can 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, we implemented a Common Stock Purchase Rights Plan and
distributed one right for each share of our common stock outstanding. Each right
has an initial exercise price of $36 for one share of our common stock. The
rights are not exercisable or transferable, apart from our common stock, until
after a person or group acquires, or has the right to acquire, beneficial
ownership of 15% (20% in the case of EGS Associates, L.P., EGS Partners, L.L.C.,
Bev Partners, L.P., Jonas Partners, L.P. and several affiliated individuals) or
more of our common stock (which threshold may, under certain circumstances, be
reduced to 10%) or announces a tender or exchange offer to acquire such
percentage of our common stock. Upon such occurrence, each right (other than
rights owned by such person or group) will entitle the holder to purchase from
us, or the particular acquiring person or group under certain circumstances and
conditions, the number of shares of our, or such person's or group's, common
stock having a market value equal to twice the exercise price of the right. The
rights are redeemable by our Board of Directors under circumstances set forth in
the rights agreement. The Rights Plan could have the effect of making it more
difficult for a third party to acquire, or discourage a third party from
attempting to acquire, control of us without negotiating with our Board of
Directors.
WE HAVE NEVER PAID DIVIDENDS.
We have never declared or paid a dividend on our common stock, and we
expect that a substantial portion of our future earnings will be retained for
expansion or development of our business, which may include additional
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<PAGE> 12
acquisitions. Whether we will pay dividends in the future will be at the
discretion of our Board of Directors and will depend upon, among other things,
future earnings, operations, capital requirements and surplus, our general
financial condition, restrictive covenants in any of our loans or other
agreements, and other factors as the Board of Directors may deem to be relevant,
including the desirability of cash dividends to stockholders.
THERE ARE SUBSTANTIAL SHARES ELIGIBLE FOR FUTURE SALE WHICH MAY
ADVERSELY AFFECT OUR STOCK PRICE.
On the date of this prospectus, we had 11,144,319 shares of common
stock issued and outstanding and 3,828,336 shares of common stock reserved for
issuance. The possibility that substantial amounts of our common stock may be
issued and/or freely resold in the public market may adversely affect prevailing
market prices for our common stock and could impair our ability to raise capital
through the sale of our equity securities.
Of the 11,144,319 shares of common stock issued and outstanding, we
believe that approximately 8,240,000 of the shares are freely tradable without
restriction or further registration under the Securities Act, excluding any
shares held or purchased by one of our "affiliates" (in general, a person who
has a control relationship with us). We believe the approximately 1.7 million
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.
In general, under Rule 144, 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 our common stock or (ii) the average weekly trading volume in our common
stock on The Nasdaq National 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 us. A person (or persons whose shares are aggregated) who is
deemed not to have been an "affiliate" of ours at any time during the 90 days
preceding a sale by that person and who has beneficially owned his shares for at
least two years, will be able to sell his 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 Securities Act, unless
thereafter held by an "affiliate" of ours.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of any of the
securities being offered by the selling shareholders under this prospectus.
Expenses expected to be incurred by us in connection with this offering
are estimated to be approximately $25,000.
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<PAGE> 13
SELLING SHAREHOLDERS
Of the 1,547,999 shares of our common stock offered by this prospectus,
1,407,272 are issuable upon the conversion of shares of our Series A Convertible
Redeemable Preferred Stock, and 140,727 are issuable to First London Securities
Corporation, or its permitted assignees, upon the exercise of warrants we issued
to First London in connection with its corporate finance consulting and
financial advisory services performed on our behalf. Except for First London
Securities Corporation, none of the selling shareholders listed below have been
officers, directors, or employees of ours, nor have they had a material
relationship with us beyond their investment in our Series A Convertible
Redeemable Preferred Stock.
The following table sets forth certain information with respect to the
amount of shares of our common stock that would beneficially owned by the named
selling shareholders upon conversion of their respective shares of Series A
Convertible Redeemable Preferred Stock, or exercise of warrants, as applicable.
The percentages listed below are adjusted to reflect the sale of the shares of
common stock offered. The following table assumes that each of the selling
shareholders: (i) converts all of his or her shares of Series A Convertible
Redeemable Preferred Stock into common stock (or exercises all of its warrants);
and (ii) sells all of his or her converted (or exercised) shares of common
stock.
<TABLE>
<CAPTION>
OWNERSHIP OF SHARES OWNERSHIP OF SHARES
OF COMMON STOCK OF COMMON STOCK
PRIOR TO OFFERING AFTER OFFERING **
------------------------ NUMBER OF SHARES ------------------------
SELLING SHAREHOLDER SHARES PERCENTAGE OFFERED SHARES PERCENTAGE
------------------- ------ ---------- -------------- ------ ----------
<S> <C> <C> <C> <C> <C>
Betty Anderson 6,061 * 6,061 0 *
AOL Partnership Ltd. 12,121 * 12,121 0 *
Apogee Fund, L.P. 117,606 * 60,606 57,000 *
Willard W. Askew 12,121 * 12,121 0 *
Clara Bandy 1,818 * 1,818 0 *
Dale W. Brown 6,061 * 6,061 0 *
Timothy H. Brown & Vivian D. Brown,
TTEE 3,030 * 3,030 0 *
Anne Dahlson 6,061 * 6,061 0 *
The Dechard Foundation 12,121 * 12,121 0 *
Paul & Patricia DiPietrantonio 3,030 * 3,030 0 *
Deborah Doorey 3,030 * 3,030 0 *
Michael Doorey 3,030 * 3,030 0 *
Dudley Profit Sharing Trust 6,061 * 6,061 0 *
EBS Asset Management P/S Plan 10,599 * 6,061 4,539 *
EBS Microcap Partners LP 37,602 * 26,667 10,935 *
EBS Partners LP 69,143 * 47,273 21,870 *
Lucia A. Englander 12,121 * 12,121 0 *
Kathryn Esping Agency, GP 161,212 * 121,212 40,000 *
First London Securities Corp. 282,380 * 140,727 141,653 *
Gladney Fund 12,121 * 12,121 0 *
Richard T. Groos Trust 12,121 * 12,121 0 *
Hull Overseas, Ltd. 24,242 * 24,242 0 *
Interstate Auto Insurance 6,061 * 6,061 0 *
James P. Judge 12,121 * 12,121 0 *
Dorothy A. Kamp Trust 3,030 * 3,030 0 *
</TABLE>
-11-
<PAGE> 14
<TABLE>
<CAPTION>
OWNERSHIP OF SHARES OWNERSHIP OF SHARES
OF COMMON STOCK OF COMMON STOCK
PRIOR TO OFFERING AFTER OFFERING **
------------------------ NUMBER OF SHARES ------------------------
SELLING SHAREHOLDER SHARES PERCENTAGE OFFERED SHARES PERCENTAGE
------------------- ------ ---------- -------------- ------ ----------
<S> <C> <C> <C> <C> <C>
Felice M. Kantor 6,061 * 6,061 0 *
Edward Kennedy 6,061 * 6,061 0 *
Geraldine A. Kreutzjans 606 * 606 0 *
L. Family Management, Co. Ltd. 24,242 * 24,242 0 *
Lighthouse Genesis Partners, LP 7,273 * 7,273 0 *
Bhupendra H. Mahida 6,061 * 6,061 0 *
John E. Meyer 77,241 * 54,545 22,695 *
John E. Meyer & Betty J. Meyer
Foundation 6,061 * 6,061 0 *
Jerome W. Neidfelt 12,121 * 12,121 0 *
Joe Neuhoff Equity 24,242 * 24,242 0 *
Ray Nixon, Jr. 12,121 * 12,121 0 *
Mildred M. Nizny Trust 2,424 * 2,424 0 *
Milo Noble 9,697 * 9,697 0 *
Oakley Park Co. 6,061 * 6,061 0 *
Marcia O'Rourke 6,061 * 6,061 0 *
John F. Popken 6,061 * 6,061 0 *
Peaquot Scout Fund, L.P. 484,848 * 484,848 0 *
Pharos Genesis Fund Limited 67,879 * 67,879 0 *
Precept Capital Master Fund 12,121 * 12,121 0 *
R&D Investment Partnership, LP 41,212 * 41,212 0 *
John Roach Custody Sub. Acct. 6,061 * 6,061 0 *
Victor E. Salvino 24,242 * 24,242 0 *
George A. Shutt 24,242 * 24,242 0 *
Peter P. and Bonnie B. Smith
Irrevocable Trust for Children 22,121 * 12,121 10,000 *
John S. and Bonnie P. Strauss 60,606 * 60,606 0 *
Charles Tandoi TTEE 14,545 * 14,545 0 *
Toby G. Weber 6,061 * 6,061 0 *
Walker Smith Capital 50,042 * 24,242 25,800 *
Ann T. Warinner Trust 3,030 * 3,030 0 *
Billy A. West Trust 6,061 * 6,061 0 *
Dorothy D. Winchester 6,061 * 6,061 0 *
Rush Winchester 6,061 * 6,061 0 *
</TABLE>
* Indicates less than 1%
** Assumes all of the shares of common stock registered hereby are sold.
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<PAGE> 15
PLAN OF DISTRIBUTION
GENERAL
TRANSACTIONS. The selling shareholders may offer and sell their shares
of common stock in one or more of the following transactions:
o on the Nasdaq National Market,
o in the over-the-counter market,
o in negotiated transactions, or
o in a combination of any of these transactions.
PRICES. The selling shareholders may sell their shares of common stock
at any of the following prices:
o fixed prices which may be changed,
o market prices prevailing at the time of sale,
o prices related to prevailing market prices, or
o negotiated prices.
DIRECT SALES; AGENTS, DEALERS AND UNDERWRITERS. The selling
shareholders may effect transactions by selling the shares of common stock in
any of the following ways:
o directly to purchasers, or
o to or through agents, dealers or underwriters designated from
time to time.
Agents, dealers or underwriters may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling shareholders
and/or the purchasers of shares for whom they act as agent or to whom they sell
as principals, or both. The selling shareholders and any agents, dealers or
underwriters that act in connection with the sale of shares might be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any discount or commission received by them and any profit on the resale of
shares as principal might be deemed to be underwriting discounts or commissions
under the Securities Act.
SUPPLEMENTS. To the extent required, we will set forth in a supplement
to this prospectus filed with the SEC the number of shares to be sold, the
purchase price and public offering price, the name or names of any agent, dealer
or underwriter, and any applicable commissions or discounts with respect to a
particular offering.
STATE SECURITIES LAW. Under the securities laws of some states, the
selling shareholders may only sell the shares in those states through registered
or licensed brokers or dealers. In addition, in some states the selling
shareholders may not sell the shares unless they have been registered or
qualified for sale in that state or an exemption from registration or
qualification is available and is satisfied.
EXPENSES; INDEMNIFICATION. We will not receive any of the proceeds from
the sale of the shares of common stock sold by the selling shareholders and will
bear all expenses related to the registration of this offering but will not pay
for any underwriting commissions, fees or discounts, if any. We will indemnify
the selling shareholders against some civil liabilities, including some
liabilities which may arise under the Securities Act.
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<PAGE> 16
LEGAL MATTERS
Greenberg Traurig, P.A., of Miami, Florida, has passed upon the
validity of the issuance of our shares of common stock offered in this
prospectus.
EXPERTS
The financial statements as of December 31, 1998 and 1997 and for the
three years in the period ended December 31, 1998, incorporated by reference
from our Annual Report on Form 10-K in this prospectus, except as they relate to
Empresa De Transporte Ferroviario S.A., have been audited by
PricewaterhouseCoopers LLP, independent accountants, and, insofar as they relate
to Empresa De Transporte Ferroviario S.A. as of December 31, 1998 and for the
year then ended, by Arthur Andersen Langton Clarke, independent accountants.
Such financial statements have been so included in reliance on the reports of
such independent accountants given on the authority of such firms as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms located at 450 5th Street, N.W., Washington,
D.C. 20549, at Seven World Trade Center, 13th Floor, New York, New York 10048
and at Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from the SEC's web site at: http://www.sec.gov. Our common stock
trades on the Nasdaq National Market. You can also inspect reports, proxy
statements and other information concerning our company at the offices of the
Nasdaq National Market, 1735 K Street, N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act.
(1) Our Annual Report on Form 10-K for the year ended December 31,
1998; and
(2) The description of our common stock contained in our
Registration Statement on Form 8-A filed with the SEC under
Section 12 of the Exchange Act on September 10, 1992,
including any amendments or reports filed for the purpose of
updating the description.
We will provide without charge to each person, including any beneficial
owner, to whom a prospectus is delivered, upon written or oral request of that
person, a copy of any and all of the information that has been incorporated by
reference in this prospectus (excluding exhibits unless specifically
incorporated by reference into those documents). Please direct requests to us at
the following address:
Secretary
RailAmerica, Inc.
301 Yamato Road
Suite 1190
Boca Raton, Florida 33431
(561) 994-6015
This prospectus is part of a registration statement we filed with the
SEC. You should only rely on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The selling shareholders are not
offering the common stock in any state where the offer is not permitted. You
should not assume that the information in this Prospectus or any supplement is
accurate as of any date other than the date on the front of those documents.
---------------
AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT REQUIRES OTHERWISE, (I)
"SECURITIES ACT" MEANS THE SECURITIES ACT OF 1933, AS AMENDED, AND (II)
"EXCHANGE ACT" MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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<PAGE> 17
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION 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.
--------------------
TABLE OF CONTENTS
PAGE
----
The Company............................................. 1
Risk Factors............................................ 4
Use of Proceeds......................................... 10
Selling Securityholders................................. 11
Plan of Distribution.................................... 13
Legal Matters........................................... 14
Experts................................................. 14
Where You Can Find More Information..................... 14
================================================================================
================================================================================
1,547,999 SHARES
OF
COMMON STOCK
RAILAMERICA, INC.
--------------------------
PROSPECTUS
--------------------------
APRIL 22, 1999
================================================================================
<PAGE> 18
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses, excluding solicitation fees, in connection with
this offering are as follows:
AMOUNT
------
Registration Fee................................. $
Legal fees and expenses.......................... $ 15,000
Accounting fees and expenses..................... $ 5,000
Printing Fees.................................... $ 3,000
Miscellaneous.................................... $ 1,708
--------
Total.......................... $ 25,000
========
ITEM 15. 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 Amended and Restated Certificate of
Incorporation provides for indemnification of the Company's officers and
directors to the extent permitted under the Delaware General Corporation Law.
The Registrant's Amended and Restated Certificate of Incorporation
limits the liability of Directors to the maximum extent permitted by Delaware
General Corporation Law. Delaware law provides that the directors of a
corporation will not be personally liable to such corporation or its
stockholders for monetary damages for breach of their fiduciary duties as
directors, except for liability (i) for any breach of their duty of loyalty to
the corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law;
or (iv) for any transaction from which the director derives an improper personal
benefit. The Registrant's Amended and Restated Certificate of Incorporation
provides that the Registrant shall indemnify its Directors and officers to the
fullest extent permitted by Delaware law, except against actions by the
Registrant approved by the Board of Directors, and requires the Registrant to
advance expenses to such Directors and officers to defend any action for which
rights of indemnification are provided in the Certificate of Incorporation, and
also permits the Board of Directors to grant such rights to its employees and
agents.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised 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. In the event that a claim of indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE> 19
ITEM 16. EXHIBITS
The following exhibits are included as a part of this Registration
Statement:
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 Certificate of Designation of Series A Convertible Redeemable
Preferred Stock*
5.1 Opinion of Greenberg Traurig, P.A.
23.1 Consent of Greenberg Traurig, P.A. (contained in exhibit 5.1)
23.2 Consent of PriceWaterhouseCoopers L.L.P.
23.3 Consent of Arthur Andersen Langton Clarke
24.1 Power of Attorney (filed with signature page)
- -----------
* Incorporated by reference to Exhibit 4.2 filed as part of the Company's
Form 10-K for the year ended December 31, 1998 filed with the Securities
and Exchange Commission on April 2, 1999.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE> 20
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-3
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Boca Raton, Florida, as of April 20, 1999.
RAILAMERICA, INC.
By: /s/ Gary O. Marino
---------------------------------------------
Gary O. Marino
Chairman, Chief Executive Officer, President
and Treasurer (Duly Authorized Representative)
POWER OF ATTORNEY
Each person whose signature appears below on this Registration
Statement hereby constitutes and appoints each of Gary O. Marino and Donald D.
Redfearn as his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities (until revoked in writing) to sign any and all amendments
(including pre-effective amendments and post-effective amendments and amendments
thereto) to this Registration Statement on Form S-3 of RailAmerica, Inc. and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, each acting alone or
his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GARY O. MARINO Chairman, Chief Executive Officer, April 20, 1999
- ------------------------------------ President and Treasurer
GARY O. MARINO (principal executive officer)
/s/ JOHN H. MARINO Vice Chairman and Director April 20, 1999
- ------------------------------------
JOHN H. MARINO
/s/ DONALD D. REDFEARN Executive Vice President, April 20, 1999
- ------------------------------------ Secretary and Director
DONALD D. REDFEARN
/s/ LARRY BUSH Vice President and Controller April 20, 1999
- ------------------------------------ (principal accounting officer)
LARRY BUSH
/s/ RICHARD RAMPELL Director April 20, 1999
- -----------------------------------
RICHARD RAMPELL
/s/ JOHN M. SULLIVAN Director April 20, 1999
- -----------------------------------
JOHN M. SULLIVAN
/s/ CHARLES SWINBURN Director April 20, 1999
- -----------------------------------
CHARLES SWINBURN
/s/ DOUGLAS R. NICHOLS Director April 20, 1999
- -----------------------------------
DOUGLAS R. NICHOLS
</TABLE>
II-4
<PAGE> 1
EXHIBIT 5.1
GREENBERG TRAURIG, P.A.
April 20, 1999
RailAmerica, Inc.
301 Yamato Road, Suite 1190
Boca Raton, Florida 33431
Ladies and Gentlemen:
We have acted as counsel for RailAmerica, Inc., a Delaware corporation
(the "Company"), in connection with the Company's Registration Statement on Form
S-3 (the "Registration Statement") being filed by the Company under the
Securities Act of 1933, as amended, with respect to 1,547,999 shares (the
"Shares") of the Company's common stock, par value $.001 per share (the "Common
Stock"), which may be disposed of from time to time by the selling shareholders
(the "Selling Shareholders") named therein. Of the 1,547,999 shares of Common
Stock offered thereby, 1,407,272 are issuable to the Selling Shareholders, or
their permitted assignees, upon the conversion of the Company's Series A
Convertible Redeemable Preferred Stock (the "Series A Preferred Stock"), and
140,727 are issuable to First London Securities Corporation ("First London") or
its permitted assignees, upon the exercise of a warrant (the "Warrant") issued
to First London in connection with its placement agent services performed on
behalf of the Company pursuant to their letter agreement dated December 2, 1998.
In connection with the preparation of the Registration Statement and
this letter, we have examined, considered and relied upon the following
documents (collectively, the "Documents"): the letter agreement dated December
2, 1998, by and between First London and the Company; the Certificate of
Designation for the Series A Preferred Stock filed with the Secretary of State
of the State of Delaware; the written consent of the Board of Directors of the
Company, dated December 28, 1998, approving the private offering of the Series A
Preferred Stock; the Company's Certificate of Incorporation (as amended) as
filed with the Secretary of State of the State of Delaware; the Company's bylaws
and corporate minute book; and such other documents and matters of law as we
have considered necessary or appropriate for the expression of the opinions
contained herein.
In rendering the opinions set forth below, we have assumed without
investigation the genuineness of all signatures and the authenticity of all
documents submitted to us as originals, the conformity to authentic original
documents of all documents submitted to us as copies, and the veracity of the
Documents. As to questions of fact material to the opinions hereinafter
expressed, we have relied upon the representations and warranties of the
Company made in the Documents.
Based solely upon and subject to the Documents, and subject to the
qualifications set forth below, we are of the opinion that the Shares to be sold
by the Selling Shareholders pursuant to the Registration Statement upon
conversion of the Series A Preferred Stock and exercise of the Warrant will have
been duly authorized and validly issued and will be fully paid and
nonassessable.
Although we have acted as counsel to the Company in connection with
certain other matters, our engagement is limited to certain matters about which
we have been consulted. Consequently, there may exist matters of a legal nature
involving the Company in connection with which we have not been consulted and
have not represented the Company. This opinion letter is limited to the matters
stated herein and no opinions may be implied or inferred beyond the matters
expressly stated herein. The opinions expressed herein are as of the date
hereof, and we assume no obligation to update or supplement such
<PAGE> 2
opinions to reflect any facts or circumstances that may hereafter come to our
attention or any changes in law that may hereafter occur.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the prospectus contained in the Registration Statement. In giving
such consent, we do not admit that we come within the category of persons whose
consent is required by Section 7 of the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
Very truly yours,
GREENBERG TRAURIG, P.A.
By: /s/ Fern S. Watts
-------------------------------
Fern S. Watts
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated March 12, 1999, on our audits of the consolidated
financial statements of RailAmerica, Inc. and Subsidiaries as of December 31,
1998 and 1997 and for the three years in the period ended December 31, 1998. We
also consent to the reference to our firm under the caption "Experts."
PricewaterhouseCooper LLP
Fort Lauderdale, Florida
April 19, 1998
<PAGE> 1
EXHIBIT 23.3
April 14,1999 Santiago, Chile
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the Incorporation by reference in this registration
statement filed on Form S-3 of our report dated March 12, 1999, on our audits of
the financial statements of Ferronor S.A. (a Chilean corporation and subsidiary
of RailAmerica) included in the RailAmerica, Inc. Form 10-K for the year ended
December 31, 1998.
Jesus Riveros G ARTHUR ANDERSEN
Partner LANGTON CLARKE
Santiago, Chile
