Genesee & Wyoming Inc. (G&W) has announced today that its subsidiary Genesee & Wyoming Australia (GWA) has entered into agreements to acquire Glencore Rail (GRail) for AUD1.14 billion (US$879 million) and concurrently issue a 49% equity stake in GWA to funds managed by Macquarie Infrastructure and Real Assets (MIRA).

The acquisition strengthens GWA’s nationwide footprint in Australia by adding a significant presence in the Hunter Valley coal supply chain in New South Wales complementing GWA’s existing intermodal, agricultural and mining business in South Australia and the Northern Territory.

On the other hand the creation of GWA partnership (51% G&W and 49% MIRA) joins operating expertise of GWA with financial resources of MIRA, the largest manager of infrastructure assets globally.

Transaction expected to close on December 1, 2016, subject to Australian Foreign Investment Review Board approval.

G&W Advisors: Bank of America Merrill Lynch served as financial advisor. Allens served as legal advisor on the GRail acquisition and formation of the GWA partnership, and King & Wood Mallesons served as legal advisor on the Australian debt financing.

MIRA Advisors: Macquarie Capital served as financial advisor. Norton Rose Fulbright served as legal advisor.

Jack Hellmann, President and CEO of G&W, commented:

“The acquisition of Glencore Rail solidifies GWA’s position as the most efficient rail operator with the highest service quality in the Australian rail market. Through the acquisition and 49% new equity issued to MIRA, we are effectively doubling the size of GWA and retaining 51% of a business with stronger long-term free cash flow and a significant portion of GWA’s rail shipments under long-term, take-or-pay contracts.”

“We are pleased to be enhancing our existing relationship with Glencore through a two-decade rail haulage contract that provides for exclusive rights to rail shipments from some of the premier steam coal mines in the world, serving end users in Japan, South Korea, Taiwan and Southeast Asia. Furthermore, we believe that our partnership with a world class Australian infrastructure investor in MIRA will enable us to leverage our rail platform for extensive future growth within Australia.”

Frank Kwok, Asia-Pacific Co-Head of MIRA, said:

“We are pleased to be partnering with G&W, a leading global rail operator in their Australian business. GWA is a strong business that owns and operates essential rail infrastructure supporting industries primarily operating in regional Australia. For MIRA, this agreement expands our infrastructure footprint in Australia and allows us to contribute our international experience investing and managing transport and transport services assets.”