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GATX Corporation Develops Innovative Financing Method

CHICAGO, Oct. 2 /PRNewswire/ -- GATX Corporation (NYSE: GMT) today announced that it has securitized a portion of its recent railcar deliveries through the use of a newly developed structured financing mechanism. This financing will result in greater financial flexibility and will provide a means to improve equity returns in the company's railcar business because of its non-recourse nature.

In the new financing method, GATX has placed 2,700 railcars into a special purpose corporation which has been funded with a leveraged lease incorporating the issuance of pass through certificates. The lease obligations are secured by the underlying cash flows from the subleasing of the cars. The railcars will continue to be managed by General American Transportation Corporation, GATX's railcar leasing and management subsidiary.

David M. Edwards, chief financial officer of GATX, stated, "One of our strategic goals is to optimize the use of the company's capital and to maximize the returns that we earn on shareholders' equity. Historically, the expansion of GATX's substantial fleet of railcars has been a major use of capital. This has been funded through a variety of recourse financing vehicles which have a low implicit cost but which have required greater equity support due to their recourse nature. By using the special purpose corporation structure, we have reduced the need for equity support on these railcars, while continuing to finance fleet additions on an attractive basis and relying on General American to manage the railcars. The substantial services which General American supplies to its customers have always been, and will continue to be, the primary reason that General American manages the largest fleet of railroad tank cars in North America."

A key element in this transaction was the use of securitization techniques which resulted in an AA rating from Standard and Poor's and an Aa rating from Moody's for the pass through certificates, which reflects the stability of the historical cash flows generated by General American's railcar fleet. This has reduced the debt cost in this transaction since these ratings are higher than GATX's corporate rating.

Mr. Edwards concluded, "We are delighted with the successful completion of this innovative financing. While it involved a small portion of GATX's railcar fleet, we intend to use this structure, where appropriate, for further railcar deliveries and to explore application of this and other creative solutions on other GATX operations. Improving our return on equity, reducing financing costs, and creatively financing asset additions are keys to achieving higher returns for our shareholders."

GATX Corporation provides more than $6 billion of service-enhanced assets primarily used to help its customers transport, store or distribute their products and information. GATX's assets include railcars and locomotives, bulk liquid terminals and pipelines, commercial aircraft, ships, information technology equipment, warehouses and other capital assets and related services.

Investor, corporate information and press releases may be found at http://www.gatx.com . A variety of current financial information, historical financial information, press releases and photographs are available at this site. GATX press releases may be obtained by automated PR News Company News On-Call's automated fax service at 800-758-5804. The company identification number for GATX is 105121.

SOURCE GATX Corporation
 -0- 10/02/97


/CONTACT: George S. Lowman of GATX Corporation, 312-621-6599/

/Company News On-Call: http://www.prnewswire.com or fax, 800-758-5804, ext. 105121/

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CO: GATX Corporation ST: Illinois IN: FIN SU: PDT

MR-CM -- CGTH022 -- 0213 10/02/97 12:35 EDT http://www.prnewswire.com
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Publication:PR Newswire
Date:Oct 2, 1997
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