L.B. Foster Announces Closing of DM&E Merger
PITTSBURGH, Oct. 5 /-- L.B. Foster Company ("Foster") (NASDAQ:FSTR), today announced that on October 4, 2007 a subsidiary of Canadian Pacific Railway Limited ("CP") consummated its merger with the Dakota Minnesota and Eastern Railroad ("DM&E"), in which Foster held a minority equity interest.
In exchange for its DM&E preferred stock, warrants and common stock, Foster received approximately $148.8 million, with an additional $2.15 million being deposited into two escrow accounts to secure certain of the DM&E's obligations. As a result of this payment, Foster will record a pretax gain on the sale of its investment of approximately $122.9 million in the fourth quarter and will record incremental dividend income of $8.5 million in the third quarter.
In the future, Foster also may receive approximately $41.6 million if CP commences construction of the Powder River Basin ("PRB") expansion, and up to a maximum of approximately $84 million if CP attains milestones related to PRB coal tonnage thresholds. These "contingent payments" are estimates and are subject to interest and/or inflation adjustments and certain rights of offset. Foster and other former DM&E shareholders have transferred their interests in their respective "contingent payments" to a limited partnership which will oversee the collection and distribution of any such "contingent payments". The CP has stated that it may take several years to determine whether to proceed with the PRB expansion.
L.B. Foster Company is a leading manufacturer, fabricator, and distributor of products for the rail, construction and utility and energy markets with approximately 30 locations throughout the United States.
FCMN Contact: jbalog@lbfosterco.com
Source: L.B. Foster Company
CONTACT: Lee B. Foster II of L.B. Foster Company, +1-412-928-3417, fax,
+1-412-928-7891, investors@LBFosterCo.com
