AIP Carves American Steamship from GATX

Rand Logistics, a portfolio company of American Industrial Partners (AIP), has agreed to acquire American Steamship Company from GATX for $260 million.

American Steamship Company (ASC) transports over 27 million tons annually of dry bulk commodities such as iron ore, coal and limestone throughout the Great Lakes region. The company’s fleet, ranging in size from 635 feet to over 1,000 feet, is the largest fleet of U.S. flagged vessels on the Great Lakes.

ASC’s single-trip vessel-carrying capacity ranges from 24,000 to 81,000 gross tons. During the company’s navigation season, its vessels operate twenty-four hours a day, seven days a week and require no onshore assistance to unload cargo.

ASC was founded in Buffalo, New York in 1907 by John Boland and Adam Cornelius.  In 1973, the Boland and Cornelius families sold ASC to the General American Transportation Corporation (GATX). ASC reported a segment profit of about $35 million (not including a $10 million one-time gain) in 2019.

“ASC is an iconic American company with a rich 113-year history and an important role in moving the materials that built, sustain and drive the vast industrial capacity of the Great Lakes region.  We are thrilled to partner with management and further increase our investment in the Great Lakes shipping and logistics ecosystem,” said Jason Perri, a partner of AIP and chairman of Rand’s board of directors. “ASC’s asset quality and track record of reliability, safety and service in moving raw materials for its customers is world-class and we look forward to integrating these two great companies into a new and larger platform for growth under our ownership.”

Rand Logistics is a provider of bulk freight shipping and ship repair services throughout the Great Lakes region. Through its subsidiaries, Rand operates a fleet of eleven self-unloading bulk carriers, three conventional bulk carriers, three articulated tug & barge units, and two ship repair companies.

Rand is the only operator on the Great Lakes with both US and Canadian flagged fleets, which allows flexibility in executing port-to-port services in both the United States and Canada. The company’s US-flagged vessels operate under the Jones Act, which reserves domestic waterborne commerce to vessels that are US-owned, built and crewed. Similarly, Rand’s Canadian flagged vessels operate under the Coasting Trade Act, which reserves domestic waterborne commerce to Canadian registered and crewed vessels.

Rand Logistics filed for Chapter 11 bankruptcy protection in January 2018 after agreeing to a debt-for-equity swap with its lender Lightship Capital, an affiliate of AIP. Today, Rand is headquartered in Jersey City, New Jersey with annual revenues of about $135 million and 500 employees.

According to Rand, the combination of Rand and ASC will create the largest and most diverse fleet on the Great Lakes, serving different and highly complementary markets with multiple self-unloading vessel classes. “We are excited about this transformative combination of two leading vessel operators on the Great Lakes.  This strategic union will create significant additional shipping capacity through network efficiencies and repositioning of the respective fleets.  All of which will allow the resulting company to further improve its customer service and offer additional flexibility and shipping capacity to its customer base,” said Peter Coxon, chief executive officer of Rand.

American Industrial Partners (AIP) makes equity and debt investments in manufacturing and industrial services companies that have revenues of at least $300 million, negative EBITDA to $250 million, and enterprise values of up to $2 billion. The firm was founded in 1989 and is headquartered in New York City.

Chicago-headquartered GATX (NYSE: GATX) is an equipment finance company whose primary activities consist of leasing railcars and locomotives. In addition, GATX has investments in industrial equipment and marine assets, including ownership of the American Steamship Company.

© 2020 Private Equity Professional | February 11, 2020

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