Ford to Sell USL Rail Unit to First Union for $900 Million

Ford Motor Co., taking another step to divest its nonautomotive financing businesses, said Thursday that it agreed to sell its USL Capital Rail Services unit to First Union Rail Corp. for $900 million.

Ford said discussions continue with potential buyers of USL Capital’s five remaining businesses. It expects to announce a series of sales on an ongoing basis and complete the sale of the majority of USL Capital’s $9.7 billion in assets by the end of the summer.

“The company concluded that the highest value for these assets could be realized by selling the various pieces separately,” said Ken Whipple, president of Ford’s Financial Services Group.

USL Capital Rail Services, which leases freight cars to shippers and railroads, manages assets of $679 million, or about 7% of USL Capital’s total managed assets. It has the second-largest diversified rail fleet in the industry and the sixth-highest number of cars in the industry, with 26,000.

The fast-growing rail services unit, which had 6,000 freight cars five years ago, is based with its parent in San Francisco. It has 30 employees, who also work out of Chicago and Houston.

First Union Rail, a Chicago-based unit of First Union Corp., has agreed to interview those employees and hire as appropriate, said USL Capital spokesman Bill Sellover.

First Union said the acquisition will immediately add to earnings once completed. After the purchase, the firm said First Union Rail will be the second-largest general freight car operating lease company in North America, with a fleet of more than 44,000 rail cars serving 300 clients. GE Capital Railcar Services in Devon, Pa., is the largest.

Ford’s stock edged up 12.5 cents to $37; First Union was down 50 cents to $64.125. Both trade on the New York Stock Exchange.