Greenbrier and SAR say the JV will establish a new multi-modal business centred on creating and maximizing existing and new freight corridors throughout Saudi Arabia and the wider Gulf Cooperation Council (GCC) region.
Greenbrier will provide up to $US 100m in new wagons, lifting equipment and other terminal investment necessary to place wagons in revenue service, and will operate intermodal and other freight terminals.
In turn, SAR will provide the JV with locomotives, rail access and service schedules to operations. Using its investment syndication model, Greenbrier will facilitate the generation of additional $US 170m for the JV in collaboration with SAR and international public and private investment communities.
The JV is intended to create a self-funding business, following the North American railway model, which the companies say will reduce reliance on government funding for the rail sector over time and enhance value. Greenbrier will have the first right to manufacture and provide wagons for the JV's fleet and will establish a Saudi-based manufacturing/assembly presence.
The companies say pooling resources brings several benefits to SAR including technology and knowledge transfer, advanced railcar designs and efficient network service design. The JV will promote supply chain efficiencies by increasing local content, reducing the capital burden on SAR, lowering SAR’s operating costs and improving the railway's competitiveness with road transport.
Other objectives of the JV are:
- accelerating the development of Saudi Arabia into a regional logistics centre by fully integrating rail into the freight transport sector
- maximizing in-country employment opportunities in railcar manufacturing, railcar asset support services and supply chain logistics related to the Saudi rail system, and
- increasing safety and improving the liveability of Saudi cities.
The JV is subject to the completion of final due diligence by the parties and required government or corporate approvals.
The announcement came as Greenbrier announced its fourth quarter highlights, including net earnings attributable to Greenbrier for the quarter of $US 30.9m, or $US 0.94 per diluted share, on revenue of $US 689.2m. Adjusted Ebitda for the quarter was $US 75.3m, or 10.9% of revenue.