Downer EDI Limited has entered an agreement to sell its freight rail business to Progress Rail, a Caterpillar company, for USD 109 million. The sale includes customer contracts, facilities located at Malaga, Port Augusta and Clyde as well as other licensed facilities and associated assets and liabilities.
The sale of the freight rail business is scheduled to be completed in January 2018. As a result of the transaction, Downer will book a non-cash write down of USD 40 million relating to Freight Rail goodwill and legacy assets.
Downer and Progress Rail have worked together for almost seven decades supplying and maintaining locomotives in Australia and the two companies will maintain an ongoing relationship in Australia. The sale of the freight rail business to Progress Rail is subject to the satisfaction of Conditions Precedent and is scheduled to be completed in January 2018.
Downer’s Rail division will have more than USD 8 billion of work-in-hand after the divestment of the freight rail business and the division remains on track to achieve its underlying full year earnings target despite no contribution from freight in the second half of the financial year.
“This acquisition allows Progress Rail to directly serve rail customers in Australia with best-in-class products and services. It also reinforces Progress Rail’s commitment to the rail industry,” Progress Rail says.
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