Greenbrier Cos. (GBX) forms JV to grow owned railcar lease fleet; extends commercial platform

February 5, 2021 6:11 AM EST

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The Greenbrier Companies, Inc. (NYSE: GBX) ("Greenbrier"), a leading international supplier of equipment and services to global freight transportation markets, today announced plans to form GBX Leasing, a new leasing joint venture (JV) with The Longwood Group ("Longwood") to develop an owned portfolio of leased railcars primarily to be built by Greenbrier. Longwood is a Chicago-based transportation equipment advisory and asset management firm.

GBX Leasing will acquire approximately $200 million of newly-built and leased railcars per annum from Greenbrier. The initial portfolio for GBX Leasing has been substantially identified from leased railcars on Greenbrier's balance sheet or in its backlog. GBX Leasing will observe Greenbrier's established, strict portfolio standards for long-term investment, including credit quality, asset diversity, balanced maturities and asset liquidity. The initial equity investment is tax-advantaged as a result of the five-year net operating loss carryback provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, bonus depreciation and the MACRS depreciation system.

Greenbrier CEO and Chairman William A. Furman stated, "Today's announcement is a logical bolt-on to Greenbrier's leasing platform and commercial strategy. The railcar portfolio built by GBX Leasing will create a new annuity stream of tax-advantaged cash flows while reducing Greenbrier's exposure to the new railcar order and delivery cycle. This move bolsters Greenbrier's value proposition for its customers and shareholders."

Greenbrier will beneficially own about 95% of GBX Leasing with the balance held by Longwood. Greenbrier will provide lease originations, remarketing and railcar administrative services to GBX Leasing. Longwood will provide strategic and investment guidance, portfolio management and management oversight. GBX Leasing will be governed by a board of three Greenbrier representatives and one Longwood representative.

The JV will be financed with non-recourse debt and is expected to be levered about 3:1 debt to equity. A separate, initial $300 million warehouse debt facility will be established to facilitate the JV's activities. GBX Leasing will aggregate leased railcars to obtain permanent debt financing issued in connection with asset-backed securities. Greenbrier will consolidate GBX Leasing and intends to provide additional public disclosure regarding its leasing business with its second fiscal quarter financial reporting.

Longwood CEO D. Stephen Menzies will serve as Chairman & CEO of GBX Leasing.

Furman said, "Steve is a leader and innovator in the rail industry, with more than 30 years in rail equipment leasing, financing and manufacturing. He brings very recent customer relationships as well as extensive knowledge and expertise across multiple facets of the railcar leasing, financing and rail industries."

Menzies is highly experienced in the transportation equipment leasing business. He formed Longwood in 2018 to pursue a range of commercial investments in freight rail equipment and adjacent transportation markets. Prior to Longwood, Menzies was Senior Vice President, Trinity Industries and Group President of Trinity's railcar leasing, manufacturing and services businesses. Under his leadership, leased railcar assets under ownership or management grew to exceed $10 billion while he also held responsibility for its highly successful North American manufacturing operations and expanding services business. In 2001, Trinity acquired Transport Capital, a railcar leasing and asset management business, which was founded and led by Menzies beginning in 1991. Before this, he led the rail finance business of Newcourt Capital and had senior leadership roles in sales, marketing and international business for GATX Corp. Menzies began his career in transportation equipment leasing at GE Capital.

"I am excited to expand our relationship and to partner with Greenbrier in this important strategic development. Based on my experience, I am confident that GBX Leasing will deliver strong value to Greenbrier customers and its investors," Menzies said.

The formation of GBX Leasing is subject to the completion of final documentation by the parties. Origination and funding of GBX Leasing is anticipated to occur in the first calendar quarter of 2021.



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