FreightCar America, Inc. (RAIL) Earnings Call Transcript & Summary

Hello, and welcome to the Special Meeting of Stockholders of FreightCar America, Inc. Please note that today's meeting is being recorded. During the meeting, we will take questions directly related to the proposal after it is explained. You can submit questions or comments at any time by clicking on the message icon. It is now my pleasure to turn today's meeting over to Mr. James R. Meyer, President and Chief Executive Officer. Mr. Meyer, the floor is yours.

Good morning, and welcome to the special meeting of Stockholders of FreightCar America, Inc. I'm Jim Meyer, President and Chief Executive Officer of the company and a member of the company's Board of Directors, and I'll act as Chairman of this meeting. I, along with my fellow executive officers of the company, appreciate your attendance, your interest, and most importantly, your support of FreightCar America. In light of the continuing public health concerns related to COVID-19 and out of concern for the health and safety of our stockholders, directors and members of management, we decided to hold the meeting in a virtual format as we also aim to increase access and participation. Stockholders may submit questions at any time during this meeting in the space provided on the virtual meeting screen. The purpose of this meeting is to consider and vote upon a proposal to approve the issuance of 23% of FreightCar's outstanding common stock upon the exercise of a warrant to be issued to a lender to the company on a fully diluted basis at the time the warrant is exercised after giving effect to such issuance. As required by and in accordance with NASDAQ listing rules 5635(b) and 5635(d) for certain private placement issuances of more than 20% of our common stock. The details surrounding the issuance of the warrant and the common stock are described in further detail in FreightCar's proxy statement which was filed on November 2, 2020, and was mailed to each stockholder of record on October 19, 2020. We will discuss the proposal in greater detail a bit later and provide an opportunity for questions at that time. Before proceeding, we would like to take the time to thank our employees for their dedication to safety and operational excellence, while continuing to execute and perform for our customers in this challenging environment. Furthermore, we would like to thank the first responders and essential workers all around the world who are continuing to keep us safe and allow us to better serve our customers. In order to ensure the orderly conduct of the business of this meeting, we have adopted the order of business set forth in the agenda and established rules of order for this meeting. A copy of the agenda and the rules of order can be found on the website you logged into to access this meeting. We ask that in fairness to all stockholders attending this meeting, you honor the agenda and the rules of order as directed by me as the Chairman of the meeting. During this meeting, questions from stockholders should pertain to the proposals being considered at this meeting. If you have a question related to the proposal, please submit your question on the portal and as outlined in the rules of order. These questions will be viewed by management and address in accordance with the rules of order. After voting on the proposal being considered at this meeting has concluded, this meeting will be adjourned. We'll now proceed. Christopher Eppel, Vice President, Finance, Chief Financial Officer, Treasurer and Corporate Secretary, will act as Secretary of this meeting. In addition, the Board has appointed Chris Eppel to serve as the inspector of the election for this meeting. I confirm that he has submitted his oath of office with the Secretary of the meeting for inclusion in the minutes of this meeting. Chris, would you please give us the Secretary's report?

Mr. Chairman, a notice of the special meeting, the proxy statement and proxy card were mailed on November 4, 2020, to stockholders of record as of October 19, 2020, the record date for this meeting. Affidavits to that effect will be part of the record of this meeting, a list of our shareholders of record of common stock of the company at the close of business on October 19, 2020, is available on the website you logged into as access to this meeting. This list has been open for examination at the company for any purpose as relevant to this meeting during ordinary business hours for the past 10 days. This list is also available for inspection during this meeting by any stockholder on the website used to access this meeting. I will file a copy of the list of stockholders with the records of the company. Proxies representing 9,210,900 shares of common stock were received prior to the meeting. These shares amount to 59.3% of the shares entitled to vote and constitute a quorum.

Thank you, Chris. One item of business is under consideration today. The approval of the issuance of 23% of the company's outstanding common stock upon the exercise of a warrant to be issued to a lender to the company on a fully diluted basis at the time the warrant is exercised after giving effect to such issuance. As required by and in accordance with NASDAQ listing rules 5635(b) and 5635(d) for certain private issuances of more than 20% of the company's outstanding common stock. It is now 11:07 Eastern Time on November 24, 2020, the polls are open for voting. [Voting]

All FreightCar America Inc. stockholders entitled to vote at this meeting have the ability to do so online. If you are a stockholder entitled to vote and have not yet voted, please do so via the website used to access this meeting. Please remember that if you have already voted by proxy, it is not necessary to vote again unless you wish to change your vote. After voting has been completed on all matters on the agenda, we will close the polls, and the inspector of the election will provide his preliminary report. The only item of business at this Special Meeting of Stockholders is the approval of the issuance of the warrant shares issuable upon exercise of the warrant. On October 13, 2020, the company entered into a term loan credit agreement with CO Finance LVS VI LLC as lender. The credit agreement provides for a term loan credit facility of $40 million, consisting of a single term loan to be funded upon satisfaction of certain conditions, including stockholder approval of the proposal being considered today. In connection with the term loan credit agreement, the company and lender also entered into a warrant acquisition agreement, pursuant to which the company agreed to issue a warrant to lender to purchase a number of shares of our common stock equal to an aggregate of 23% of our outstanding common stock on a fully diluted basis at the time the warrant is exercised after giving effect to such issuance. The funding of the term loan and under the credit agreement and the issuance of the common stock under the warrant are both condition upon stockholder approval of this proposal. If this proposal is not approved, then the warrant cannot be issued to the lender. Because the issuance of the warrant is a condition to the funding of the term loan under the credit agreement, if this proposal is not approved, then the lender will not fund the term loan. The funding of the term loan is critical to our manufacturing repositioning plan. In the event the company will need to seek alternative sources of financing to replace the term loan, there can be no assurance that any alternative sources of funding will be at favorable rates and duration or at all. Before pursuing the transaction contemplated in this proposal, we engaged in a much long process with our outside advisers to advise us with respect to this process. Based in part on the advice received and recommendations from advisers, we have determined that the funding of the term loan and the issuance of the warrant is critical to FreightCar's ability to execute its manufacturing and operational strategy as currently planned. We also believe this plan is superior to all other available alternatives for FreightCar and its stockholders. More detailed information concerning the details of the transactions contemplated in this proposal can be found in our Form 8-K filed on October 13, 2020, and in the proxy statement mailed to each stockholder of record and filed with the SEC on November 2, 2020. Are there any questions from shareholders on this proposal?

There are no questions, Mr. Chairman.

Thank you. This concludes the discussion of the proposal to be voted on today. The polls are about to close. So if you have not yet voted, please do so. [Voting]

Thank you. Since everyone has had the opportunity to vote, it is 11:12 Eastern Time on November 24, 2020, and the polls are now closed. Let's take a minute to confirm the results of the voting. Chris, do you have the results?

The proposal for the approval of the issuance of the warrant share issuable upon exercise of the warrant has received a majority of the votes cast. Therefore, the issuance of the warrant shares upon the exercise of the warrant is approved. Final results will be made available in our Form 8-K to be filed within 4 business days of the meeting.

Thank you, Chris, and thanks to all of the stockholders for being here with us virtually and who have voted today as well as those who submitted their proxies before the meeting. Additionally, I would like to express our sincere gratitude to all members of the FreightCar family for their continued service and commitment to FreightCar as we navigate these unpredictable times and continue toward our goal of increasing stockholder value through execution of our manufacturing repositioning. Lastly, on behalf of the FreightCar directors, officers and employees, we would like to again thank all of the first responders and essential workers on the front lines of the pandemic for their dedication and courage. This concludes the Special Meeting of Stockholders. The meeting is adjourned. Thank you all for your attendance this morning.

Ladies and gentlemen, this concludes the meeting. You may now disconnect, and have a pleasant day.