Thursday, February 02, 2012

RailAmerica to acquire Michigan shortline, percentage of another

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RailAmerica has signed an agreement to acquire Marquette Rail LLC for $40 million, subject to final adjustments for working capital. The acquisition is subject to customary closing conditions and Surface Transportation Board approval.

Headquartered in Ludington, Mich., Marquette operates 126 miles of track running from Grand Rapids, Mich., to Ludington and Manistee, Mich. Marquette interchanges with CSXT in Grand Rapids and serves customers primarily in the chemical, pulp & paper and non-metallics industries. Marquette hauled approximately fifteen-thousand carloads of freight during the fiscal year ended 2011.

For the next 12 months, RailAmerica anticipates Marquette will generate approximately $13 million in revenue, $4 million in operating income (excluding closing costs) and $2 million in depreciation and amortization. The company intends to finance the purchase using cash on hand and its revolving credit facility.

RailAmerica also has signed an agreement to acquire a 70-percent interest in the Wellsboro and Corning Railroad and Industrial Waste Group from Myles Group for $18 million. Members of the Myles family will retain the remaining 30-percent interest in the companies and continue in senior leadership roles. The acquisition is subject to customary closing conditions and is expected to be completed early in the second quarter of 2012.

The WCOR operates 38 miles of track running from Wellsboro, Pa., to Corning, N.Y., handling a variety of industrial products primarily used in the natural resources industry. RailAmerica anticipates the WCOR to experience rapid traffic growth and expand its freight and non-freight services in support of the development of the Marcellus Shale natural gas industry.

IWG performs transload, storage and other value-added services for customers in the energy and waste management industries. It operates four transloading facilities located in Wellsboro, Pa.; Corning, N.Y.; Toledo, Ohio; and Amelia, Va. RailAmerica expects IWG to continue to grow by developing transload operations in new markets and extending its services throughout RailAmerica's network.

Over the next 12 months of operations, WCOR and IWG combined are expected to generate approximately $17 million in revenue, $3.5 million in operating income (excluding closing costs) and $1.3 million in depreciation and amortization. RailAmerica intends to finance the purchase using cash on hand and its revolving credit facility. The financial results of the WCOR and IWG will be consolidated into RailAmerica's financials, and RailAmerica's net income will be reduced by the 30-percent minority interest.

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