The March 20, 2006 issue of Forture has a good background story, What It Takes to Build a Railroad, about the Dakota Minnesota & Eastern Railroad and its efforts to build to Wyoming’s Powder River Basin. The story goes into some detail the hoops that Kevin Schieffer, the CEO, has had to jump through to get the project underway. It seems everyone wants his pound of flesh. The story even quotes Trains editor Jim Wrinn, “so the DM&E (construction) is going to bring in folks from around the world”. When it gets online, I’ll add the URL.
Well, Fortune finally put the DM&E story online:
http://money.cnn.com/magazines/fortune/fortune_archive/2006/03/20/8371801/index.htm
How a railroad gets built.
Good for you, EASTSIDE. Thank you.
Thank you for providining the link to this article. I have been watching the developments of this proposed expansion as news comes available. I wonder if the BN and CNW faced as much opposition when they first entred the Powder River Basin? It seems there is a special interest group for everything and everybody nowadays.
Now for a prediction. Once the line is built, DM&E will be ripe for a take over as mentioned and that most likely to railroad will be CN.
Terry
We (C&NW) did not face anything like this amount of local protest when we went into the Powder River Basin. Of course many of the ranchers had just sold their land and mineral rights for $100-250 million. They could afford to leave WY.
Developers here in Charlottesville, VA often go through the process of getting all of the approvals and then sell the property with the approvals at a handsome profit to someone who actually builds the houses. Perhaps the DM&E will do the same along with the loan guarantee!
If the DM&E succeeds in completing the line to the Powder River and gets the business it expects, the RR will be worth a bundle and then it can go IPO (go public). Undoubtedly some of the funds will be used to pay down the debt incurred for the acquisition of the IMRL. But much of it will go to the hedge funds, which will probably want to cash out of some, if not all, of their investment. Schieffer and other owners will be sitting on some nice paper profits. Later, if some other railroad is interested, they’re going to have to pay market value for the shares.
We’re also assuming the demand for coal will hold up. If the economy tanks, all bets are off.
Eastside the one constant need is power. We use more more electricaty now than we did 30 years ago. 30 YEars ago AC was just something for cars now it is a nessicaty for everyone. Computers take up juice. A couple years ago I read an article were power demand is going to double in the next 20 years so the DM&E should do fine.