Container operator and transportation finance company CAI International is selling its remaining railcar fleet to Infinity Transportation, a transportation lessor and Global Atlantic Group subsidiary, so that it can concentrate on its container leasing business.
Infinity will buy the assets for $228.7 million in a deal that will close by Dec. 31.
“The sale of our remaining railcar fleet is an important milestone, as exiting the rail business allows us to execute our strategy of maximizing shareholder returns by focusing all of our resources on our core container leasing business,” said Timothy Page, CAI’s interim president and CEO.
Page said the sale will generate approximately $33 million in net cash proceeds after repayment of rail-related debt and transaction costs, and it will result in an after-tax loss of approximately $17 million in discontinued operations, or $0.96 per fully diluted share.
Monday’s announcement comes as no surprise, as CAI has been saying that it planned to sell its railcar fleet. A year ago, CAI said it hired Centerview Partners to help it “explore and evaluate the company’s strategic alternatives.”
CAI’s shedding of its railcar fleet comes as CAI’s container leasing business has seen “unprecedented levels of demand” in the second half of 2020, with customer demand and market conditions continuing to look strong toward the end of the fourth quarter. CAI has seen its forward order book of committed leases increase, a utilization rate of 99.4% and “historically high” prices on the secondary sale market as manufacturers manage their supplies.
Because of these factors, CAI expects net income from continuing operations to increase by more than 40% in the fourth quarter of 2020 compared with a year ago, and it anticipates market conditions “to remain favorable for increasing sequential quarterly earnings in early 2021,” Page said.
CAI’s worldwide fleet totals approximately 1.7 million twenty-foot equivalent units of containers. The company has 14 officers in 12 countries, including the U.S.
In August, CAI International sold CAI Logistics to third-party logistics provider NFI for an undisclosed amount.
Infinity Transportation leases rail, aviation and intermodal assets, according to its website. It also is an “active buyer” for new and midlife equipment, and it is involved in the management, operation, maintenance and repair of its assets.