Genesee & Wyoming to launch $1.3 billion pro rata loans on Monday

By Sara Rosenberg

New York, Aug. 8 - Genesee & Wyoming Inc. is set to hold a bank meeting on Monday to launch the $1.3 billion pro rata portion of its $2.3 billion senior secured credit facility, according to a market source.

Bank of America Merrill Lynch is the lead arranger and bookrunner on the deal.

The pro rata debt includes a $425 million five-year revolver, of which about $125 million is expected to be drawn at close, and an $875 million five-year term loan A, both talked at Libor plus 250 basis points, the source said.

Based on filings with the Securities and Exchange Commission, it is expected that the revolver will be multi-currency, and that of the total term loan A amount, $555 million will be a U.S. tranche, $220 million will be an Australian tranche and $100 million will be a Canadian tranche.

The company's credit facility also provides for a $1 billion seven-year term loan B for which pricing has been outlined in the regulatory filings at Libor plus 375 bps with a 1% Libor floor.

The term loan B has 101 soft call protection for one year.

Financial covenants include a minimum interest coverage ratio and a maximum total leverage ratio.

There is an up to $250 million accordion feature, plus an additional amount subject to compliance on a pro forma basis with a total leverage ratio of 3.00:1.00 as long as the term loan A does not exceed $500 million.

Amortization on the term loan A is 5% in years one and two, 10% in year three, and 15% in years four and five. Term loan B amortization is 1% per year with the balance due at maturity.

Proceeds will be used to help fund the acquisition of RailAmerica Inc. for $27.50 per share and refinance existing debt.

In addition, the company plans on getting $800 million of equity or equity-linked securities from the Carlyle Group, of which a minimum of $350 million will be convertible preferred stock that has a coupon of 5% per annum and is mandatorily convertible after two years at a conversion price of $58.49.

The transaction is anticipated to increase Genesee & Wyoming's total revenues to around $1.4 billion.

Pro forma total debt to EBITDA is expected to be 4 times at the end of 2012, with the plan being to decrease leverage to around 3 times by the end of 2013.

Closing is expected in the fourth quarter, subject to customary conditions, shareholder approval and regulatory approval.

Genesee & Wyoming is a Greenwich, Conn.-based operator of short line and regional freight railroads and provider of railcar switching services. RailAmerica is a Jacksonville, Fla.-based owner and operator of short line and regional freight railroads.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.