GATX Corporation, in a joint venture with Brookfield Infrastructure Partners, announced Thursday its acquisition of 105,000 rail cars from Wells Fargo for a total of $4.4 billion.
In addition, Brookfield is entering into a separate agreement to acquire Wells Fargo’s rail lease portfolio of 23,000 rail cars and 440 locomotives.
Under terms of the agreement, GATX will contribute $400 million for a 30 percent stake in the joint venture, along with commercial control of both the joint venture’s assets and those acquired under Brookfield’s separate acquisition from Wells Fargo.
The remaining 70 percent of the JV will be held by Brookfield Infrastructure. GATX, however, will also hold annual call options that allow GATX, over time, to assume 100 percent ownership of the operation and its inventory. If each annual option is exercised, GATX would assume full ownership of the JV in 10 years.
GATX is headquartered in Chicago, Brookfield Infrastructure in Toronto.
Wells Fargo Securities, BofA Securities, MUFG Bank Ltd., and Sumitomo Mitsui Banking Corporation are providing the joint venture with a fully underwritten $3.2 billion 5-year unsecured term loan and a $250 million unsecured revolving credit facility.
BofA Securities acted as sole financial advisor to GATX and Brookfield on the deal.
Mayer Brown is serving as outside legal counsel to GATX and Skadden, Arps, Slate, Meagher & Flom are advising Brookfield Infrastructure.
The Skadden team is led by Eric Otness (Houston) with Ralph Pérez (Chicago and Houston), Jeffrey Brill (New York) and Michael Reed (New York); Tax partner Jeff Romero (Houston) and counsel Su Da (Palo Alto); Banking partner David Wagener (Chicago); Antitrust/Competition partner Kenneth Schwartz (New York); Energy and Infrastructure Projects partner Aryan Moniri (Washington, D.C.); Intellectual Property and Technology partner Ken Kumayama (Palo Alto); Corporate associates Nicholas Woodruff (Houston), Libby Rudolf (Houston) and Jonathan Berger (New York) and Capital Markets counsel Laura Salvati (New York).
“This is an outstanding opportunity to build on GATX’s leading North American platform,” Robert C. Lyons, president and CEO of GATX, said in a statement. “Throughout our 125-plus-year history, we have developed unique asset, commercial and operational expertise that positions us to acquire and integrate this fleet. Importantly, by acquiring the assets in this manner, we will maintain the financial flexibility and capacity to continue growing all of our businesses while capitalizing on the value creation opportunities inherent in the assets acquired.”