Covia announced that it has executed a definitive agreement to sell its Winchester and Western Railroad (W&W) to an affiliate of OmniTRAX Inc. for total proceeds of $105.0 million in cash, subject to certain adjustments set forth in the definitive agreement. As part of the transaction, OmniTRAX will assume ownership of approximately 470 railcars, which the W&W currently owns.
Richard Navarre, chairman, president and chief executive officer of Covia, said, “Today’s announcement is another key step in the actions we are taking to execute our strategy to optimize our asset base and maximize cash flow.” He added, “As we know from working with them for many years, OmniTRAX is an ideal candidate to further enhance the value of the W&W. They have a long track record of successfully operating logistical assets, and by partnering with them on this transaction, we will be able to meaningfully improve our capital structure, as well as take an important step in improving our structural costs by better balancing our railcar fleet with demand.”
“The acquisition of this strategic distribution hub is a deliberate step toward enhancing the continued growth and strength of our thriving network,” said Kevin Shuba, OmniTRAX chief executive officer. “Our expansion into these dynamic markets with a diverse established customer base and strong regional economic partners offers tremendous growth potential.”
The W&W is reported within Covia’s Industrial segment, and the sale is not expected to have a material impact on Covia’s operating profitability. The transaction is expected to close in the third quarter of 2019 and is subject to customary closing conditions, including Surface Transportation Board review.