The Greenbrier Companies, Inc. (NYSE:GBX) entered into an asset purchase agreement to acquire ARI Component Venture, LLC, Castings, Llc, Southwest Steel Casting Company, LLC and Manufacturing Business from American Railcar Industries, Inc. for $350 million on April 17, 2019. The sale will be effected through Greenbrier's acquisition of the assets and assumption of the liabilities that are primarily related to the business. The purchase price includes the issuance by Greenbrier of a $50 million principal amount senior unsecured convertible promissory note. The balance of the price is cash consideration. The purchase price is subject to a working capital and other customary post-closing adjustments. The Convertible Note will accrue interest at a rate of 2.25% per annum, which interest is payable semi-annually. The Convertible Note is expected to mature on the fifth anniversary of the closing and will not be redeemable by Greenbrier prior to its maturity.

Greenbrier intends to finance the transaction using cash on hand. On June 3, 2019, Greenbrier entered into an amendment to its $600 million revolving line of credit permitting to Greenbrier to borrow up to $300 million to pay a portion of the purchase price. If the transaction has not been consummated on or before the earlier of three months from the date of the purchase agreement and the date that is ten business days following Greenbrier's receipt of a demand for additional information from the U.S. Department of Justice or U.S. Federal Trade Commission, then Greenbrier may extend the end date by six months by delivering a $25 million non-refundable deposit to American Railcar and agreeing to reimburse American Railcar for certain expenses. The deposit shall be applied against the purchase price at the closing or deemed to satisfy the termination upon a subsequent termination of the purchase agreement. John O'Bryan joins Greenbrier as Senior Vice President.

If the Transaction has not been consummated before the End Date as initially extended by Greenbrier, then Greenbrier may extend the End Date by an additional three months. Upon the occurrence of a Governmental Order Termination or an End Date Termination where at such date the parties have failed to obtain approval under the HSR Act, then Greenbrier will be required to pay a termination fee to American Railcar in the amount of $25 million unless the deposit has been previously delivered.

The closing is subject to regulatory approval, customary conditions, including, among other things, the expiration or early termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, customary regulatory reviews and approvals. As of July 17, 2019, the transaction received notification of early termination of the waiting period under the HSR Act. Greenbrier expects the deal to close by end of calendar 2019. As of July 17, 2019, the transaction remains subject to certain closing conditions, and is expected to close in the ordinary course near the end of July 2019. The transaction is expected to be free cash flow accretive within the first 12 months and subsequently deliver at least $30 million in annual run-rate synergy opportunities. As on July 26, 2019, The Greenbrier Companies, Inc. (NYSE:GBX) completed the acquisition of Manufacturing Business of American Railcar Industries.

BofA Merrill Lynch and Goldman Sachs & Co. LLC acted as financial advisors to Greenbrier. William H. Gump, Eugene Chang, Wesley Powell, Justin Sommerkamp and Bradley Friedman of Willkie Farr & Gallagher LLP acted as legal advisor to American Railcar Industries, Inc. and ITE Management. Stephen D. Cooke of Paul Hastings LLP acted as legal advisor to Greenbrier. Deutsche Bank acted as financial advisor to American Railcar Industries, Inc. and its shareholder ITE Management L.P.