ABC-NACO has sold its operating assets to Three Cities Funds

ABC-NACO Inc. announced that it has agreed to sell all of its operating assets to TCF Railco Acquisition Corp (“TCF”) for $75 million (subject to certain adjustments and assumption of certain liabilities). The assets sold include all of the United States operating assets of the Company’s Rail Products, Track Products and Rail Services units together with the stock of the Company’s subsidiaries in Europe and its joint ventures in China. The Canadian and Mexican subsidiaries in the Rail Products Group were not included in this sale.

The sale of the assets to TCF was completed in accordance with the court-authorized sales process and is subject to a confirmation hearing on December 11, 2001 by the U.S. Bankruptcy Court for the Northern District of Illinois. In addition, the sale is subject to review under the Hart-Scott-Rodino Antitrust Improvements Act. The parties intend to close the sale as soon as possible after the necessary approvals have been received.

Vaughn W. Makary, President and Chief Executive Officer of ABC-NACO, said, “Upon completion of this sales process, ABC-NACO concluded that the TCF offer was the highest or otherwise best submitted during the bidding and sale process. We look forward to quickly closing the transaction in order to ensure a smooth transition to the new ownership. We believe TCF will bring financial stability to the Company allowing it to continue to provide outstanding products and services to the worldwide rail industry.” TCF is owned by Three Cities Funds III, L.P. and affiliates (together, the “Three Cities Funds”). The Three Cities Funds are primarily engaged in making control investments in medium-sized companies, where its investment can lead to a meaningful, positive influence on the future direction of the enterprise.

Willem de Vogel, a Partner of the Three Cities Funds stated, “We are very excited about our new partnership with ABC-NACO. It offers very attractive products and services to the rail industry. We plan to provide financial and other resources to help the company improve and renew its operations and meet its long-term strategic objectives.”

As previously announced on October 18, 2001, ABC-NACO and its U.S. subsidiaries voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Illinois. The cases have been assigned to the Honorable Judge Eugene R. Wedoff and are being jointly administered under the Case No. 01 B 36484 for ABC-NACO Inc.

The Company is one of the world’s leading suppliers of technologically advanced products to the rail industry. The Company holds pre-eminent market positions in the design, engineering and manufacture of high-performance freight car, locomotive and passenger suspension and coupling systems, wheels and mounted wheel sets. The company also supplies railroad and transit infrastructure products and services and technology-driven specialty track products.

Lincoln Partners acted as financial advisor to ABC-NACO Inc.

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