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New Flyer acquires North American Bus Industries, Inc. for $80 million

New Flyer Industries Inc. today announced the acquisition of North American Bus Industries, Inc. (NABI) from an affiliate of Cerberus Capital Management, L.P. for cash consideration of approximately $80 million, virtually all for the satisfaction of affiliate debt. The acquisition excludes discontinued operations in Hungary and substantially all related assets and liabilities. NABI was founded in 1992, and was known prior to October 1996 as American Ikarus. The completion of the acquisition and related financing transactions is subject only to confirmation of the required wire transfers of funds which is expected later today.

With bus manufacturing operations in Anniston, AL, a parts distribution center in Delaware, OH, and a service center in Jurupa Valley, CA, NABI is a manufacturer of urban transit buses for U.S. customers. NABI also operates an aftermarket parts organizations, sourcing parts from over 200 different suppliers and providing support for transit buses throughout North America.

“The acquisition of NABI marks an important milestone for New Flyer and is consistent with the company’s strategic plan to ensure market and technology leadership, while providing public transit operators with long-term stability and excellence in product support,” said New Flyer’s Chairman of the Board Brian Tobin in a release. ”We have been able to proceed with this transaction while maintaining a flexible and conservative approach to our balance sheet.”

“NABI represents a compelling growth platform for us,” said Paul Soubry, New Flyer’s president and CEO, in the same release. ”The addition of NABI to the New Flyer family provides New Flyer with a highly complementary product line, access to new customers, a cost efficient manufacturing platform based in Alabama, and it creates a significant player in aftermarket parts. The company plans to operate the NABI bus and NABI parts operations under the names NABI Bus, LLC and NABI Parts, LLC, respectively, within the New Flyer group of companies.”

“New Flyer is a world-class company and this acquisition will provide NABI with synergistic opportunities to achieve an even higher level of performance and success,” said Jim Marcotuli, NABI’s president and CEO. “The combined entity will be positioned to provide customers with an enhanced product offering and superior customer service.”

New Flyer says the transaction presents a number of attractive opportunities, including:

i) Enhanced Transit Bus Product Offering: The addition of NABI’s low floor (LFW) and bus rapid transit (BRT) product platforms complements New Flyer’s XcelsiorTM and MiDiTM product platforms. In addition, NABI offers buses incorporating stainless steel frames for customers who have a specific requirement for this feature. There is little overlap in customers for whom the two companies are currently building buses.

ii) Expanded Parts Business with Improved Offering and Customer Support: The addition of NABI’s aftermarket parts segment represents a significant step for New Flyer’s aftermarket parts business. New Flyer intends to synchronize the parts databases and cross-reference lists of New Flyer, Orion and NABI, which management says will permit the company to source parts more efficiently and offer expanded supply chain solutions to customers.

iii) Synergy Opportunities: New Flyer has identified opportunities for cost synergies such as in the areas of purchasing and strategic sourcing, plus general and administrative expenses that are expected to improve competiveness.

iv) Collaboration and Sharing of Technology and Best Practices: The combined entity will employ over 3,000 people who share a like-minded commitment to excellence in heavy-duty transit buses and product support with over 40,000 buses currently in operation in Canada and the US.

The transaction, including related expenses, is being funded using approximately C$65 million in proceeds from the issuance of the second and final tranche of the previously announced strategic equity investment in New Flyer by Marcopolo S.A. An additional $20 million is being drawn from the company’s renewed senior secured credit facility. On a pro forma basis, New Flyer’s Total Leverage Ratio (total indebtedness to Adjusted EBITDA, as defined in the credit agreement) would decrease to approximately 2.2x as at March 31, 2013. Furthermore, the transaction is expected to be immediately accretive to New Flyer’s earnings per share and cash flow per share.

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Posted by on Jun 21 2013. Filed under Latest News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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