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Wabtec Corp. July 26 agreed to sell certain assets — primarily locomotive after-market products and services — to GE Transportation Systems for $240 million cash.
The transaction would close in late September, subject to regulatory approvals, and would be modestly accretive to Wabtec's 2002 earnings, including GE's incremental business and an interest expense reduction.
Wabtec plans to use net after-tax sale proceeds (more than $200 million) to reduce its debt to less than $250 million, or less than 55 percent of total capital. The company's debt in 1999 reached a high of $572 million, or 75 percent of total capital.
Wabtec isn't the original equipment manufacturer (OEM) of the assets, which the company acquired as part of a November 1999 merger with MotivePower Industries. The assets would include Motor Coils Manufacturing, Wabtec Engine Systems, Wabtec Distribution and MPI de Mexico. GE also would acquire Wabtec's Barstow, Calif., and Mexican locomotive service contract businesses.
"In exploring various strategic relationships, we determined that an outright sale of certain locomotive after-market assets would be the best way to position the company long-term to work with a variety of locomotive OEMs," said Wabtec Chairman William Kassling in a prepared statement.
Wabtec plans to continue ownership of former MotivePower OEM business units that produce heat exchangers, electronic components, brake rigging and sanitation systems. The company also would retain ownership of a Boise, Idaho, locomotive plant, and a Mexican multi-product manufacturing facility and foundry.