FreightCar America completes steps in manufacturing repositioning

FreightCar America announced that it has made significant progress in its manufacturing repositioning and business transformation strategy. Highlights: Successfully finalized early termination of the lease at Cherokee, Alabama manufacturing facility effective February 28, 2021; Completed Association of American Railroads certification audits for new joint venture facility in Castanos, Mexico and now awaiting approval to start shipping railcars; Castanos completed its first car in early September and continues to ready itself for full production in 2021; Obtained new asset-backed credit facility to facilitate the business and repositioning process going forward. FreightCar America completed an amendment to its Shoals manufacturing facility lease with the RSA. The amendment accelerates the expiration date of the lease from December 31, 2026 to February 28, 2021, which aligns with FreightCar America's decision to close the Shoals facility by the end of the first quarter of 2021. In addition, the RSA has agreed to waive the base rent payable under the original lease for the months of October 2020 through February 2021. As consideration for the early termination and rent waiver, the Company agreed to sell and transfer certain basic infrastructure at the facility to the RSA. Under the amendment, FreightCar America has the ability to store railcars and other rolling stock from the end of the term through June 30, 2021 for no additional rent or other costs. In September, AAR representatives visited Castanos as a part of the certification process for the new plant. The AAR is the world's leading railroad policy, research, standard-setting and technology organization that focuses on safety and productivity. The AAR representatives conducted two customary audits and, subject to the final documentation from the AAR, the Company expects to begin shipping railcars by the end of the year. FreightCar America recently obtained a new asset-backed credit facility with a maximum aggregate principal amount of up to $20 million, subject to a borrowing base, with Siena Lending Group as lender. The Credit Facility was used to finance certain letter of credit obligations and will provide improved working capital flexibility for the Company. This new facility replaced the Company's prior $50 million revolving credit facility with BMO Harris Bank N.A., which substantially limited the company's ability to invest in its expanding Mexico operations. The agreement has a term of three years and carries an interest rate equivalent to the Base Rate plus 3.0% per annum, but not less than 6.25%.