SO, any of you that keep your ear close to the financial rail, What is your opinion of what is supposed to be unfolding at Rail America?
I’ve seen reports that say that minor resizing is just in the wind, to reports that say Genesee and Wyoming is getting ready to buy all the jewels out of the crown.
Gut instinct tells me that neither extreme is likely to be the case, more like something out of the middle.
Here is a link that will shed some light on what your talking about.
http://www.blet282.com/sold.htm
Around here these parts, the rumor mill is buzzing.
Both RailAmerica and GWI have been buying AND selling various short lines for a while now, so this is not exactly earth-shaking news.
Ahem!! well, I guess they are not in trouble anymore.
I wonder if Fortress intends to run a railroad, and grow the business, or if they intend to run a soft auction?
Only off the top of my head, I cannot recall the last property GWI sold. I also cannot recall a time when GWI bought any lines off RA. GWI’s philosophy tends to be to invest in long term porfitable properties. If they buy anything off RA, then that will be a significant bellweather of RA’s viability as an independent company. The rail investment rumor mill is that Fortress will likely partition the property and sell it off in pieces to the highest bidders. Rumors or not, its highly unlikely that an investment firm would purchase RA and continue to run it as recklessly as it has been the past decade, when RA seemed to be buying any shortline it could get its hands on just to keep “the other guys” from buying it first.
That was just one of the allegations/rumors floating around.
Just wondering aimlessly (pun intended)…I wonder if (as it applies to the CF&E track), CSX worked any restrictive language into their lease, restricting assignability of rights?
Wondering further, how interested BNSF or UP might be in those rights as a tool to use in handing off freight that they originate to the eastern carriers, at a point much further east than chicago? For the always desirable ‘longer haul’… (just a ‘wild hair’ thought)
Or, wondering aimlessly to the point of insanity, “High speed passenger rail”?
Great route if you are traveling between Chicago and Crestline OH…trouble being that, there are not many things for Chicagoans to do in Crestline…so how they would get beyond there might be a problem
Apparently you missed the GWI sales in Australia:
| "Acquisition of Remaining 50 Percent of South Australia Operations |
|---|
GREENWICH, Conn., June 2, 2006 /PRNewswire-FirstCall/ – Genesee & Wyoming Inc. (GWI) (NYSE: GWR) announced today that, effective June 1, 2006, GWI and its joint venture partner, Wesfarmers Limited (Wesfarmers), completed the previously announced sale of their Western Australia operations and certain other assets of the Australian Railroad Group (ARG) to Queensland Rail and Babcock & Brown Limited for A$1.3 billion (US$971 million at current exchange rates), plus certain completion adjustments currently estimated to be A$19 million (US$14 million). ARG was 50 percent-owned by GWI and 50 percent-owned by Wesfarmers. GWI also completed the previously announced acquisition of Wesfarmers’ 50 percent-ownership of certain South Australian operations of ARG for A$20 million (US$15 million). The Adelaide-based South Australian business has been renamed Genesee & Wyoming Australia Pty Ltd and is a 100 percent-owned s |
FWIW, GWI is well positioned to make acquisitions, having recently sold their 50% interest in ARG, an Australian rail line. ~$242 mil in the bank as of 9/30/06.
I was told by a CFE employee that the lease indicated they could only run 1 train daily to and frm Chicago. Dont know if that is true or not, but the source was pretty reliable.
It appears to me that CFE actually has done a pretty good job of attracting additional business on the line. The car count of the trains increased steadily during the 2 years. Now the trains to and from Chicago (now daily each way) run at night, so it is hard to determine how big the trains are, as I am usually asleep.
ed
Thanks for the extra info…if that is the case, then CSX has protected themselves fairly well
I guess a western carrier would play the devil just getting to the headend of that track from the west side, so it probably wouldn’t work. [xx(]
That line sure seems dead to me. Almost never a train on it, or when it is it’s usually an NS train sitting in a holding pattern on CF&E , waiting for it’s own lines to clear.
LC, I congratulate you on finding something to nitpick me back with, but frankly, foreign asset investments have very little relevance to GWI’s US investments, except to provide more cash to invest with. Similarly, it’s likely there may be some serious divesture in Mexico from GWI.
The $116Million that GWI took to the bottom line is enough to buy a good number of short lines all by itself. That plus the fact that $88Million in revolving credit was repaid at the same time leaves GWI a great deal of flexibility in ANY deal it wants to make anywhere in the world, including the U.S. Calling that irrelevant is like ignoring an elephant in your living room…
LC
You’re missing the point. Someone up above made the comment regarding RA possibly selling lines off that “oh GWI and RA buy and sell stuff all the time this isn’t news.” The point I am trying to make is that GWI doesn’t “sell off stuff”, not domestically anyway. If GWI picks up an RA property it’s because that property is a sound long term investment. Turning that on its head, if RA is selling off something GWI would consider a sound long term investment, then that speaks volumes about the financial health of RA. GWI selling off overseas assets is irrelevant to it’s domestic investment strategy in that GWI’s investment philosophy overseas is highly different than it’s domestic investment philosophy. You can’t predict GWI’s decisions on what to buy or sell in the US based on its decisions in, say, Bolivia, Australia, or Mexico, as the political and economic environments in those countries do not allow for the same methodology for choosing investments. Their sale of overseas assets does net the company cash, which it can use for investing domestically, yes, but one can’t draw a parallel and say that because GWI sold an Australian property that it would be any more or less likely to sell a domestic property. To put it simply, GWI does not tend to sell domestic properties – if they ever have at all – because GWI does not make the kind of rash investments that RA has made in the past. RA selling a property off isn’t too suprising; if GWI started selling of domestic properties, the shareholders would start raising eyebrows.