Australian firm Downer EDI has signed an agreement to sell its freight rail business to Caterpillar unit Progress Rail as part of a deal valued at A$109m ($82.5m).

The sale comprises Downer’s customer contracts, as well as facilities located at Malaga, Port Augusta and Clyde.

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It also covers various other licensed facilities and associated assets and liabilities.

"We are currently working with CRRC to deliver more high-quality passenger trains in Sydney through the Sydney Growth Trains project, and Melbourne through the High Capacity Metro Trains project."

Downer is also set to transfer 360 personnel that are currently employed by the company to Progress Rail under the arrangement.

Furthermore, Downer will book a non-cash write down of $40m related to Freight Rail goodwill and legacy assets.

Progress Rail president and CEO and Caterpillar senior vice-president Billy Ainsworth said: “This acquisition allows Progress Rail to directly serve rail customers in Australia with best-in-class products and services.

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“It also reinforces Progress Rail’s commitment to the rail industry.”

Downer will now plan to focus on its passenger transportation business and exploit new opportunities such as the Parramatta Light Rail in Sydney and the introduction of new regional trains to replace ageing fleets.

Downer CEO Grant Fenn said: “The Waratah trains have established themselves as the best performing trains in Australia and we have formed a valuable strategic relationship with our Chinese partner, CRRC Changchun Railway Vehicles.

“We are currently working with CRRC to deliver more high-quality passenger trains in Sydney through the Sydney Growth Trains project, and Melbourne through the High Capacity Metro Trains project.”

In addition to public transport operations, Downer’s passenger rail business comprises project management services, and digital and data solutions, as well as long-term Through Life Support (TLS) maintenance contracts.

The sale of the freight rail business is subject to customary closing conditions and is expected to be completed in January.

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