GATX Corporation (NYSE:GATX) today announced that it has entered into a stock purchase agreement for the sale of its American Steamship Company (ASC) business to Rand Logistics, Inc. for a purchase price of $260 million, subject to working capital and other closing adjustments. GATX expects the net sales proceeds to reduce its new debt issuance in 2020.
ASC operates the largest fleet of U.S.-flagged vessels on the Great Lakes, providing waterborne transportation of dry bulk commodities such as iron ore, coal, and limestone. ASC reported segment profit of $46.1 million for 2019 (including a one-time gain of $10.5 million), and its assets comprised 3.5% of GATX’s total assets on Dec. 31, 2019.
The 12-ship fleet consists of self-unloading vessels that range in length from 635-feet to 1,000-feet.
“As a leading operator of self-unloading vessels on the Great Lakes, ASC has been a strong contributor for GATX since 1973,” said Brian A. Kenney, president and chief executive officer of GATX. “This sale allows GATX to focus on our core franchises in global railcar and aircraft spare engine leasing.”
“We are excited about this transformative combination of two leading vessel operators on the Great Lakes. This strategic union will create significant additional shipping capacity through network efficiencies and repositioning of the respective fleets. All of which will allow the resulting company to further improve its customer service and offer additional flexibility and shipping capacity to its customer base,” said Peter Coxon, Chief Executive Officer of Rand, which is a portfolio company of private equity investment firm American Industrial Partners (AIP).
“ASC is an iconic American company with a rich 113-year history and an important role in moving the materials that built, sustain and drive the vast industrial capacity of the Great Lakes region. We are thrilled to partner with management and further increase our investment in the Great Lakes shipping and logistics ecosystem,” said Jason Perri, Partner of AIP and Chairman of Rand’s Board of Directors. “ASC’s asset quality and track record of reliability, safety and service in moving raw materials for its customers is world class and we look forward to integrating these two great companies into a new and larger platform for growth under our ownership.”
The transaction is subject to customary closing conditions and regulatory approvals.