FreightCar America secures a $115 million term loan, reducing capital costs by 40% and enhancing financial flexibility.
Quiver AI Summary
FreightCar America, Inc. announced that it has secured a new term loan facility to improve its financial position and reduce its cost of capital by approximately 40%. The $115 million loan, finalized on December 31, 2024, will be used to redeem all outstanding shares of Series C Preferred Stock and settle related accrued dividends. This financing arrangement is expected to generate savings of about $9.2 million in the first year, equating to roughly $0.26 per share on a fully diluted basis. CFO Mike Riordan highlighted that this development enhances the company’s financial flexibility and supports its growth strategy. FreightCar America, based in Chicago, specializes in manufacturing railroad freight cars and components and has a long-standing reputation in the industry.
Potential Positives
- New financing arrangement reduces the Company’s cost of capital by approximately 40%, resulting in significant cost savings of about $9.2 million in the first year.
- Completion of the $115 million term loan enhances financial flexibility and cash flow generation, supporting the Company’s growth strategy.
- The redemption of all outstanding shares of Series C Preferred Stock strengthens the capital structure and improves the equity position of the Company.
Potential Negatives
- The announcement relies heavily on the positive implications of a new loan without addressing potential risks associated with increased debt.
- The fact that the company is redeeming preferred stock might suggest a previous reliance on more expensive financing, raising concerns about past financial management.
- The reliance on a variable interest rate (SOFR + 600) could lead to future financial instability if interest rates rise significantly.
FAQ
What is the new financing arrangement announced by FreightCar America?
FreightCar America completed a $115 million term loan to improve financial flexibility and reduce cost of capital by approximately 40%.
How will the term loan impact FreightCar America's cost of capital?
The new term loan will lower the company’s cost of capital by about 40%, resulting in savings of approximately $9.2 million in the first year.
What will the proceeds from the term loan be used for?
The proceeds will be used to redeem all outstanding shares of Series C Preferred Stock and settle all related accrued dividends.
Who commented on the financial improvement at FreightCar America?
Mike Riordan, Chief Financial Officer of FreightCar America, stated that the financing bolsters capital structure and lowers borrowing costs.
What services does FreightCar America provide?
FreightCar America designs, produces, and supplies railroad freight cars, railcar parts, repairs, rebody services, and railcar conversions.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
$RAIL Insider Trading Activity
$RAIL insiders have traded $RAIL stock on the open market 5 times in the past 6 months. Of those trades, 2 have been purchases and 3 have been sales.
Here’s a breakdown of recent trading of $RAIL stock by insiders over the last 6 months:
- JAMES R MEYER purchased 23,400 shares.
- NIGRIS FELAN JOSE DE purchased 4,000 shares.
- WILLIAM D GEHL has traded it 2 times. They made 0 purchases and 2 sales, selling 22,500 shares.
- MALCOLM F MOORE sold 10,000 shares.
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$RAIL Hedge Fund Activity
We have seen 34 institutional investors add shares of $RAIL stock to their portfolio, and 16 decrease their positions in their most recent quarter.
Here are some of the largest recent moves:
- MINERVA ADVISORS LLC removed 367,308 shares (-46.7%) from their portfolio in Q3 2024
- JANE STREET GROUP, LLC added 184,600 shares (+inf%) to their portfolio in Q3 2024
- ARROWSTREET CAPITAL, LIMITED PARTNERSHIP added 172,711 shares (+inf%) to their portfolio in Q3 2024
- WITTENBERG INVESTMENT MANAGEMENT, INC. removed 163,147 shares (-100.0%) from their portfolio in Q3 2024
- ACADIAN ASSET MANAGEMENT LLC added 125,301 shares (+inf%) to their portfolio in Q3 2024
- ALLSPRING GLOBAL INVESTMENTS HOLDINGS, LLC added 98,898 shares (+inf%) to their portfolio in Q3 2024
- EAM INVESTORS, LLC added 93,048 shares (+inf%) to their portfolio in Q3 2024
To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.
Full Release
New financing arrangement reduces Company’s cost of capital by approximately 40%
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 31
st
, 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 31
st
, 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
This article was originally published on Quiver News, read the full story.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
