THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, May 24, 1996 TAG: 9605240498
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: 35 lines
In a drive to boost its income from railcar leasing, First Union Corp. has agreed to buy more than 26,000 freight cars from a unit of Ford Motor Co.
The Charlotte-based parent of First Union National Bank of Virginia said Thursday it will pay $900 million, in cash, for the rail-service assets of USL Capital, a commercial finance and leasing unit of Ford's Financial Services Group.
The acquisition is due to be completed in July.
First Union's push into rail car leasing is part of a broader campaign to generate additional income from non-lending sources. The bank holding company also has built large mutual fund and investment banking operations in recent years.
First Union, which began leasing railcars two years ago, said the transaction with Ford will triple the size of its rail car fleet. It will also make First Union's railcar-leasing subsidiary the second-largest company of its kind in the country, a spokesman said. GE Railcar Services, a unit of General Electric Co., is the largest with 145,000 cars.
After the transaction, its First Union Rail Corp. subsidiary will have more than 44,000 cars and 300 clients, said First Union spokesman David Scanzoni.
``Right now, we lease about 150 cars to Norfolk Southern,'' the Norfolk-based railroad company, Scanzoni said. ``That will increase to over 500 with this acquisition. We also lease about 500 cars to CSX Transportation, and that will end up being about 600 cars.''
The agreement with Ford comes on the heels of First Union's purchase in April of Northbrook Rail Corp., a leasing company with 3,000 rail cars.
Ford said its decision to sell the rail car leasing operation was part of a broader effort to sell part or all of USL Capital, which it acquired in 1987. by CNB