Dow has signed agreements to divest its rail infrastructure assets at six North American sites to Watco Companies.
Dow stated that it will receive more than $310m in cash proceeds for this transaction.
It is selling assets in Plaquemine and St. Charles, Louisiana; Freeport and Seadrift, Texas; and Ft. Saskatchewan and Prentiss in Alberta, Canada.
Watco operates a portfolio of short-line railroads, port and terminal.
Dow and Watco will sign long-term service agreements to provide reliable and cost-advantaged services for the current Dow businesses at the six sites.
The companies stated that they will collaborate to ensure a smooth transition. The transaction is slated to complete in the last quarter of this year and subject to closing conditions.
After the completion of the transaction, 14 Dow employees and 400 contract workers will transition to Watco.
Dow CEO and chairman Jim Fitterling said: “Today’s announcement is part of an on-going review of our ownership of non-product producing assets and is driven by our commitment to apply a best-owner mindset to everything we do.
“It aligns to Dow’s strategy to continue to grow our core businesses in a capital-efficient manner. The transaction will liberate cash from our balance sheet that we will use to pay down debt and invest in our core value-generating businesses.”
Watco CEO Dan Smith added: “We are grateful for the confidence Dow has shown in Watco by trusting us with this critical role. This represents a revolutionary approach to industrial in-plant rail operations and we’re proud to help Dow create value for many years to come.”
In 2018, Greenbrier and Watco reached an agreement to terminate their railcar repair joint venture GBW Railcar Services (GBW).