The Greenbrier Companies increased the size of its previously announced offering of convertible senior notes due 2028 (new notes) to an aggregate principal amount of $325 million. The new notes were offered in a private placement to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended. Greenbrier also granted the initial purchasers the right to purchase, within a 13-day period beginning on the date Greenbrier first issues the new notes, up to an additional $48.75 million aggregate principal amount of notes on the same terms and conditions. Greenbrier expects to close the offering of the new notes on or about April 20, subject to satisfaction of customary closing conditions.

The new notes will be Greenbrier’s general, unsecured, senior obligations and will rank equally in right of payment with all of Greenbrier’s existing and future senior unsecured debt. The new notes will bear interest at an annual rate of 2.875%, payable semiannually in arrears in cash on April 15 and Oct. 15 of each year, beginning on Oct. 15, 2021. The new notes will mature on April 15, 2028, unless earlier redeemed, repurchased or converted in accordance with their terms prior to such date.

The new notes will be convertible into shares of Greenbrier’s common stock pursuant to their terms based on an initial conversion rate of 18.0317 shares of Greenbrier’s common stock per $1,000 principal amount of the notes, which is equivalent to an initial conversion price of approximately $55.46 per share of common stock. This represents a premium of 30% above the last reported sale price of Greenbrier’s common stock on the New York Stock Exchange on April 15 ($42.66 per share).

Prior to Jan. 15, 2028, the new notes will be convertible at the option of the holders of the new notes only upon the satisfaction of certain conditions and during certain periods and, thereafter, at any time until the close of business on the second business day immediately preceding the maturity date. Upon conversion, the new notes will be convertible into cash and, if applicable, shares of Greenbrier’s common stock based on the applicable conversion rate(s). The conversion rate and conversion price are subject to adjustment in certain events.

Greenbrier expects to use approximately $228.4 million of the net proceeds from the offering of the notes to repurchase approximately $207.1 million of the outstanding principal amount of Greenbrier’s 2.875% convertible senior notes due 2024 (the 2.875% notes) in connection with privately negotiated transactions executed concurrently with the pricing of the offering of the new notes. In connection with any repurchases of the 2.875% notes and the offering of the new notes, there may be increased trading activity in Greenbrier’s common stock, which may impact the market price of Greenbrier’s common stock and the effective conversion price of the new notes.

Greenbrier intends to use approximately $20 million of the net proceeds from the offering to repurchase 468,823 shares of its common stock. Such repurchases were conducted through one or more of the initial purchasers or their affiliates as Greenbrier’s agents in negotiated transactions with institutional investors, which took place concurrently with the pricing of the offering of the new notes. The purchase price per share of the common stock repurchased from the institutional investors in such privately negotiated transactions will equal the closing price per share of Greenbrier’s common stock on the date of pricing of the offering of the new notes. Such share repurchase transactions could have increased, or limited a decline in, the market price of Greenbrier’s common stock, which may have resulted in a higher effective conversion price of the new notes.

In addition, Greenbrier intends to use approximately $55 million of the net proceeds from the offering to retire certain other indebtedness. Greenbrier expects to use the remainder of any net proceeds for general corporate purposes, including working capital, capital expenditures, repayments, redemptions or additional repurchases of indebtedness or common stock or acquisitions of, or investments in, businesses and products.

Separately, William A. Furman, chairman and CEO of Greenbrier, intends to purchase, during open trading windows, in open market transactions up to $2.5 million worth of Greenbrier’s common stock, subject to market conditions and other factors.

The new notes were offered in the United States only to qualified institutional buyers in accordance with Rule 144A under the Securities Act. The new notes and the shares of Greenbrier common stock issuable upon conversion of the new notes have not, and will not, be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Greenbrier, headquartered in Lake Oswego, OR, is a supplier of equipment and services to global freight transportation markets.