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Greenbrier, Watco Announce Railcar Repair Joint Venture

June 5, 2014
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The Greenbrier Co., Inc., Lake Oswego, Ore., and Watco Co., LLC, Pittsburg, Kan., announced a new company that will create a world-class network of railcar repair shops.

The 50/50 joint venture forms GBW Railcar Services, LLC (GBW), which will own and operate Greenbrier's and Watco's respective railcar repair, refurbishment and maintenance businesses.

GBW will have the scale to meet the certification and maintenance requirements of the growing North American tank car fleet and expand railcar repair service offerings for general freight cars of nearly all types. With current combined annual revenue of approximately $325 million and a geographically diverse network of 38 facilities located across North America, GBW will employ more than 2,100 team members. GBW will be led by Jim Cowan, chief executive officer.

GBW's combined network will feature 14 tank car repair shops—10 of which will be from Watco and four from Greenbrier—all certified by the Association of American Railroads as required by federal regulations.

This joint venture blends complementary business expertise from each company, allowing GBW to become one of the few repair shop networks able to service almost the entire range of railcar types in the North American fleet. Greenbrier provides commercial strength and leadership in railcar safety design and engineering, including its recently developed "Tank Car of the Future." Greenbrier also contributes its geographically dispersed railcar repair, refurbishment and maintenance network.

Watco brings some of the broadest tank car expertise available in the market along with substantial general railcar repair capability through a well-established and efficient railcar repair platform. Plus, Watco's multiple tank car repair facilities in the Midwest, Gulf and southeastern United States will further position GBW for success.

"This combination establishes GBW as a clear leader in the business of making tank cars safer at any speed,” says William Furman, chairman and CEO of Greenbrier. “Demand for tank car retrofit services from our customers to address the growing need for safe rail transport solutions has become robust. Greenbrier's and Watco's shared approach to tank car safety advances both public safety and environmental protection and strengthens the North American tank car fleet. Working together, we will drive improvements in public safety while preserving the economic benefits of crude by rail and the North American energy renaissance. Jim Cowan's operations expertise, particularly his recognized ability to expand gross margins and increase return on invested capital, is the key ingredient that will allow GBW to achieve its full potential."

"The combination of our repair businesses creates additional opportunities to serve the customers of both companies,” adds Rick Webb, chief executive officer of Watco. “GBW will utilize Greenbrier's and Watco's strengths to find new and better ways to offer railcar services to our customers in a manner that creates value for them and for GBW. Together, these combined attributes will make GBW stronger than the sum of its individual parts. Moreover, we are thrilled that Jim Cowan, with his unique skills, will lead GBW."

Closing of the new joint venture is subject to customary conditions, including the negotiation and execution of definitive transaction documents, receipt of all necessary approvals and other conditions. Subject to the completion of all required documents and the fulfillment of all conditions, the closing is currently expected to occur during the third calendar quarter of 2014.

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