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CHICAGO - FreightCar America, Inc. (NASDAQ:RAIL), a prominent player in the manufacturing and supply of railroad freight cars and components, has announced the successful procurement of a new term loan facility. According to InvestingPro data, the company's stock has shown remarkable strength with a 285% return over the past year. This strategic financial maneuver is set to significantly reduce the company's cost of capital by about 40%, with current analysis suggesting the stock remains undervalued relative to its Fair Value.
The term loan agreement, which closed on December 31, 2024, amounts to $115 million with a four-year maturity. The company has utilized the proceeds from this loan to fully redeem its outstanding Series C Preferred Stock, including the settlement of all accumulated dividends as of the closing date of the loan.
FreightCar America's new financing terms peg the loan at SOFR + 600 basis points. This arrangement is expected to yield considerable savings for the company, estimated at roughly $9.2 million in the first year alone, translating to an approximate $0.26 per share saving on a fully diluted basis.
Mike Riordan, the Chief Financial Officer of FreightCar America, expressed his satisfaction with the recent financial restructuring, stating, "As further testament to the strength and momentum of FreightCar America, I am extremely pleased to announce that we have taken an important step to improve our capital structure and lower borrowing costs." He emphasized that this development bolsters the company's financial agility and supports its ongoing growth strategy.
FreightCar America has a storied history dating back to 1901, with a reputation for delivering quality railcars that are pivotal to the North American supply chain and economic expansion. The company's diverse offerings span the design, production, and supply of railroad freight cars, alongside repair and conversion services that revitalize idle rail assets for revenue service.
This financial update was disclosed in the company's Form 8-K filed with the Securities and Exchange Commission. The information is based on a press release statement from FreightCar America, Inc.
In other recent news, FreightCar America, Inc. has regained compliance with Nasdaq's compensation committee requirements following a period of non-compliance, as stated in a recent 8-K filing with the Securities and Exchange Commission (SEC). The company has shown significant growth with its revenue increasing by 52% over the last twelve months. In addition, FreightCar America recently reported a substantial growth in its third-quarter revenues, raising its adjusted EBITDA forecast for 2024. The company's revenue soared by 83% to $113.3 million, primarily due to the delivery of 961 railcars.
Despite a 20% industry decline in orders, FreightCar America captured 22% of industry orders over the last year. The company remains debt-free, with a robust cash position of $44.8 million. Executives at FreightCar America expect continued high demand for railcars and project a positive growth trajectory into 2025. These recent developments indicate the company's strong financial health and market confidence.
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