FreightCar America, Inc. Announces Agreement to Redeem All Outstanding Preferred Shares with New Term Loan
FreightCar America (NASDAQ: RAIL) has secured a new $115 million 4-year term loan facility to redeem all outstanding Series C Preferred Stock shares and settle accrued dividends. The new financing, completed on December 31st, 2024, is priced at SOFR + 600, resulting in a 40% reduction in the company's cost of capital.
This reduction is expected to generate savings of approximately $9.2 million in the first year, equivalent to $0.26 per share on a fully diluted basis. The strategic financial move aims to enhance the company's financial flexibility and cash flow generation while supporting its growth strategy.
FreightCar America (NASDAQ: RAIL) ha ottenuto un nuovo prestito a termine di 115 milioni di dollari della durata di 4 anni per riscattare tutte le azioni in circolazione delle Serie C Preferred Stock e saldare i dividendi maturati. Il nuovo finanziamento, completato il 31 dicembre 2024, ha un tasso di interesse pari a SOFR + 600, il che comporta una riduzione del 40% dei costi di capitale dell'azienda.
Questa riduzione dovrebbe generare risparmi di circa 9,2 milioni di dollari nel primo anno, equivalente a 0,26 dollari per azione su base totalmente diluita. Questa mossa finanziaria strategica mira a migliorare la flessibilità finanziaria dell'azienda e la generazione di flusso di cassa, sostenendo al contempo la sua strategia di crescita.
FreightCar America (NASDAQ: RAIL) ha asegurado un nuevo préstamo a plazo de 115 millones de dólares con una duración de 4 años para canjear todas las acciones en circulación de la Serie C Preferred Stock y liquidar los dividendos acumulados. El nuevo financiamiento, completado el 31 de diciembre de 2024, tiene un precio de SOFR + 600, lo que resulta en una reducción del 40% en el costo de capital de la empresa.
Se espera que esta reducción genere ahorros de aproximadamente 9,2 millones de dólares en el primer año, equivalente a 0,26 dólares por acción en base totalmente diluida. Este movimiento financiero estratégico tiene como objetivo mejorar la flexibilidad financiera de la empresa y la generación de flujo de caja, al mismo tiempo que apoya su estrategia de crecimiento.
FreightCar America (NASDAQ: RAIL)는 모든 미발행 C 우선주 주식을 상환하고 누적 배당금을 정산하기 위해 1억 1천5백만 달러 규모의 4년 만기 신규 대출 설비를 확보했습니다. 이 신규 자금 조달은 2024년 12월 31일에 완료되었으며, 금리는 SOFR + 600으로 설정되어 회사의 자본 비용을 40% 절감하는 결과를 가져왔습니다.
이러한 절감은 첫 해에 약 920만 달러의 절감 효과를 가져올 것으로 예상되며, 완전히 희석된 기준으로 주당 0.26달러에 해당합니다. 이 전략적 재무 조치는 회사의 재무 유연성과 현금 흐름 생성 능력을 향상시키고 성장 전략을 지원하는 것을 목표로 하고 있습니다.
FreightCar America (NASDAQ: RAIL) a sécurisé une nouvelle facilité de prêt à terme de 115 millions de dollars sur 4 ans pour racheter toutes les actions en circulation de la Série C Preferred Stock et régler les dividendes accumulés. Le nouveau financement, qui a été finalisé le 31 décembre 2024, est indexé à SOFR + 600, entraînant une réduction de 40 % du coût du capital de l'entreprise.
Cette réduction devrait générer des économies d'environ 9,2 millions de dollars la première année, ce qui équivaut à 0,26 dollar par action sur une base entièrement diluante. Ce mouvement financier stratégique vise à améliorer la flexibilité financière de l'entreprise et la génération de flux de trésorerie, tout en soutenant sa stratégie de croissance.
FreightCar America (NASDAQ: RAIL) hat eine neue 4-jährige Darlehensfazilität in Höhe von 115 Millionen Dollar gesichert, um alle ausgegebenen Aktien der Serie C Preferred Stock einzulösen und aufgelaufene Dividenden zu begleichen. Die neue Finanzierung, die am 31. Dezember 2024 abgeschlossen wurde, wird zu SOFR + 600 veranschlagt, was zu einer Reduktion der Kapitalkosten des Unternehmens um 40% führt.
Es wird erwartet, dass diese Reduzierung Einsparungen von ungefähr 9,2 Millionen Dollar im ersten Jahr generiert, was 0,26 Dollar pro Aktie bei vollständiger Verwässerung entspricht. Dieser strategische finanzielle Schritt zielt darauf ab, die finanzielle Flexibilität des Unternehmens und die Cashflow-Generierung zu verbessern, während gleichzeitig die Wachstumsstrategie unterstützt wird.
- 40% reduction in cost of capital through new term loan
- $9.2 million expected annual savings ($0.26 per share)
- Complete redemption of Series C Preferred Stock, simplifying capital structure
- Enhanced financial flexibility and cash flow generation
- New $115 million debt obligation
- Exposure to variable interest rates (SOFR + 600)
Insights
The refinancing deal marks a pivotal shift in FreightCar America's capital structure, with the <money>$115 million</money> term loan replacing the more expensive Series C Preferred Stock. The <percent>40%</percent> reduction in capital costs translates to substantial annual savings of <money>$9.2 million</money>, significantly improving free cash flow. The SOFR + 600 basis points pricing indicates strong lender confidence in the company's creditworthiness.
This strategic move eliminates the dividend burden from the preferred shares and provides more financial flexibility. For perspective, the <money>$0.26</money> per share savings represents a meaningful boost to earnings potential, particularly notable for a company with a market cap around <money>$193 million</money>. The 4-year term provides stability and predictable debt service, while the timing at year-end 2024 positions RAIL for improved financial metrics starting in 2025.
The debt refinancing demonstrates sophisticated capital management, effectively transforming high-cost preferred equity into lower-cost debt. This restructuring not only optimizes the weighted average cost of capital but also simplifies the capital stack by removing the preferred shares layer. The switch to SOFR-based pricing aligns with market trends away from LIBOR, while the 600-basis-point spread reflects current market conditions for similar-sized industrial borrowers.
The <money>$9.2 million</money> annual interest savings materially strengthens RAIL's debt service coverage ratios and enhances financial flexibility for potential growth initiatives. For retail investors, think of this like refinancing a high-interest mortgage to a lower rate - it frees up cash flow while maintaining the same asset base. This deal positions FreightCar America with a more efficient balance sheet structure heading into 2025.
New financing arrangement reduces Company’s cost of capital by approximately
Further enhances financial flexibility, cash generation and ability to support growth strategy
CHICAGO, Jan. 06, 2025 (GLOBE NEWSWIRE) -- FreightCar America, Inc. (NASDAQ: RAIL) (“FreightCar America” or the “Company”), a diversified manufacturer and supplier of railroad freight cars, railcar parts and components, today announced it has completed a new term loan facility. The proceeds from the term loan will be used to redeem all outstanding shares of Series C Preferred Stock, as well as settle all related accrued dividends.
Highlights:
- The Company closed a
$115 million 4-year term loan agreement on December 31st, 2024 (the “Term Loan”). - Proceeds from the Term Loan were used to redeem all 85,412 shares of Series C Preferred Stock that were outstanding and all accrued dividends as of December 31st, 2024.
- The Term Loan is priced at SOFR + 600, which will reduce the Company’s existing cost of capital by approximately
40% , resulting in savings of approximately$9.2 million in the first year, or approximately$0.26 per share on a fully diluted basis.
Mike Riordan, Chief Financial Officer of FreightCar America, commented, “As further testament to the strength and momentum of FreightCar America, I am extremely pleased to announce that we have taken an important step to improve our capital structure and lower borrowing costs. The completion of this financing along with the retirement of our Series C Preferred Stock enhances our financial flexibility, cash flow generation and allows us to continue executing our growth strategy with even greater confidence and agility.”
For additional information about the Company’s update, please refer to the Company’s Form 8-K filed today with the Securities and Exchange Commission.
About FreightCar America
FreightCar America, headquartered in Chicago, Illinois, is a leading designer, producer and supplier of railroad freight cars, railcar parts and components. We also specialize in railcar repairs, complete railcar rebody services and railcar conversions that repurpose idled rail assets back into revenue service. Since 1901, our customers have trusted us to build quality railcars that are critical to economic growth and instrumental to the North American supply chain. To learn more about FreightCar America, visit www.freightcaramerica.com.
Investor Contact RAILIR@Riveron.com
FAQ
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