Greenbrier, MUL finalize $1 billion rail-car pact

The Greenbrier Cos. Inc. and Mitsubishi UFJ Lease & Finance (MUL) yesterday finalized their $1 billion pact to substantially expand their existing commercial relationship in North America.

The signed agreements are consistent with the memorandum of understanding the companies signed in April, the companies said in a press release.

MUL intends to grow its portfolio from 5,000 rail cars to a total of 25,000 rail cars over the next four years. As part of those growth plans, MUL has entered into a multiyear purchase commitment for 6,000 new rail cars from Greenbrier, with deliveries slated to begin in the fourth quarter and continuing through 2020.

In addition, MUL will obtain all its newly manufactured rail cars exclusively from Greenbrier through 2023. Also, MUL over the next several years will supplement its portfolio growth through a combination of lease syndications and used equipment originated and owned by Greenbrier.

The combined value of those agreements is $1 billion.

Furthermore, the companies have formed MUL Greenbrier Management Services LLC, a new rail-car management services entity that will manage all rail cars in the MUL fleet. Each company owns a 50 percent stake in the new entity. Greenbrier will receive income from rail-car asset management provided for the MUL fleet.

"This expanded relationship with MUL demonstrates our earned reputation of providing tailored solutions to our customers," said Greenbrier Chairman and Chief Executive Officer William Furman. "We take pride in the series of transactions we have completed with our friends at MUL and look forward to our continuing work together."

MUL President and CEO Tadashi Shiraishi said, "MUL has set an ambitious target to increase MUL's market share to a level that places it among North America's top 8 leading operating lessors of rail cars. We value Greenbrier's ability to build high-quality freight rail cars and assist MUL with high-value rail-car management services to support MUL's rapidly expanding fleet."

Meanwhile, Greenbrier and Astra Holding GmbH announced today that they have completed their previously announced plans to create Greenbrier-Astra Rail. The combination creates Europe’s largest end-to-end freight railcar manufacturing, engineering and repair business to reach markets throughout Europe, Eurasia, and Gulf Cooperation Council (GCC) countries.

It is expected that Greenbrier-Astra Rail will be accretive to Greenbrier’s annual earnings per share by 15 cents to 35 cents, beginning in fiscal-year 2018.

As previously announced, Greenbrier controls Greenbrier-Astra Rail with an equity interest equal to approximately 75 percent. Thomas Manns, most recently chairman of Astra Rail, owns the remainder of the new company.