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Greenbrier still open to ARII discussions: exec

Keywords: Tags  rail, rail cars, tank cars, Greenbrier, American Railcar Industries, ARII, Carl Icahn, William A. Furman Frank Haflich


LOS ANGELES — Greenbrier Cos., which successfully fended off a takeover attempt by Carl Icahn last month, said it still remains open to talks with the billionaire investor as it tries to convince shareholders that it made the right decision.

"I am as interested in shareholder value as any other shareholder," president and chief executive officer William A. Furman said this week during the company’s quarterly earnings call.

Greenbrier "remains open to conversations with Mr. Icahn about a possible combination" with Icahn-controlled American Railcar Industries Inc. (ARII) that would result in an "amalgamation" of the two management teams, he said.

However, Furman reiterated that St. Charles, Mo.-based ARII’s $597-million, $22-per-share bid in December seriously "undervalued" Greenbrier. He pointed out that he has personally purchased Greenbrier shares at $25 per share and holds more than 2 million shares of the company’s stock. Greenbrier’s common shares, which were selling Tuesday on the New York Stock Exchange at less than $18 per share, haven’t sold above $25 since March 2012, according to NYSE data.

In particular, he said the offer ignored the value of Greenbrier’s diversified business model as opposed to ARII’s, which Lake Oswego, Ore.-based Greenbrier has suggested is overly dependent on tank cars.

Greenbrier also noted this week that is ramping up output in the hot tank car market, having landed orders for more than 4,200 railcars of all types valued at more than $430 million. This includes 1,250 "higher-margin" tank cars, valued collectively at about $160 million, since the company’s fiscal year began Sept. 1.

While the company produced approximately 1,000 tank cars in fiscal 2012, Greenbrier is targeting an annual North American build rate of around 3,800 cars this year, reaching a monthly rate of 300 cars by Aug. 31, Furman said. The company builds rail cars in the United States and Mexico.

Furman acknowledged to securities analysts that ARII is "riding high on the waves of a tank car boom" and the tank car business today is "wildly profitable." However, he argued that this wave won’t last indefinitely, and Greenbrier’s more "diversified product mix" will pay off in the longer run.

Icahn has since abandoned his takeover attempt and has sold most of his 9.9-percent stake in Greenbrier (amm.com, Dec. 28).

The company reported net income of $10.4 million for the fiscal first quarter ended Nov. 30, down 28.2 percent from $14.5 million in same year-ago period, despite revenue that rose 4.3 percent to $415.4 million from $398.2 million. This was due principally to a decline in deliveries of new rail cars, although the average per-unit sales price was higher than in the year-ago quarter.


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