SSR buys Greentrains locomotive fleet


Engenco has sold its subsidiary’s fleet to contribute to its debt repayments

SSR buys Greentrains locomotive fleet
Southern Shorthual Railroad has bought a proportion of the Greentrains fleet.

 

Rail freight company Southern Shorthual Railroad (SSR) has purchased the majority of Greentrains’ locomotive fleet in a deal with parent company Engenco Limited worth over $6 million.

The deal, which includes a selection of associated locomotive spare parts owned by Gemco Rail, another of Engenco’s subsidiaries, will contribute to the repayment of Greentrains’ $17.8 million debt to to Engenco’s major shareholder, Elph Pty Ltd.

According to a "delighted" Engenco managing director and CEO Kevin Pallas, "a substantial portion" of the sold fleet has "been off-hire for quite some time in what continues to be a heavily oversupplied locomotive rental market."

Describing the transaction as a "positive outcome for both Engenco and SSR," Pallas says the value of the fleet was declining and the sale represented a "significant gain … in the current financial year."

"While there are some leasing opportunities with respect to our wagon rental fleet, medium to long-term locomotive rental prospects continue to be scarce," he says.

"When these factors were taken into account, along with the not insignificant ongoing depreciation, finance, insurance and other associated fleet holding costs, SSR’s offer to acquire the overwhelming majority of our locomotives and associated spares, presented an attractive opportunity to the Company to reduce these costs and its exposure to the capital intensive locomotive rental market."’

Engenco will retain its rail wagon fleet and a number of low-value locomotives under the deal which is expected to be completed within 60 days.

 

 

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