Genesee & Wyoming executes agreement, confirms intent to acquire Utah Railway
|Founded in 1912 and headquarted in Martin, Utah Railway currently operates more than 423 miles of track from Ogden to Grand Junction, Colo. The local railway operation interchanges with Union Pacific and Burlington Northern Santa Fe. On Aug. 20, Genesee & Wyoming Inc. announced signing an agreement to acquire Utah Railway Company for $54 million in cash. Completing the acquisition will remain subject to working capital adjustments, according to officials.|
On Aug. 20, Genesee & Wyoming Inc. announced signing an agreement to acquire Utah Railway Company for $54 million in cash, subject to working capital adjustments.
Utah Railway operates more than 423 miles of track from Ogden to Grand Junction, Colo. The Martin-headquartered railway company interchanges with Union Pacific and Burlington Northern Santa Fe.
Founded in 1912, Utah Railway operates more than 45 miles of company track and 378 miles under track access agreements. The trackage rights include agreements with Union Pacific from Provo to Grand Junction and Burlington Northern Santa Fe from Provo to Ogden.
In addition, the company serves industrial customers in and around the Salt Lake City area through trackage rights from the Utah Transit Authority. A wholly-owned subsidiary of Mueller Industries Inc., Utah Railway serves customers using 23 locomotives.
Genesee & Wyoming has appointed James Davis as general manager to head the Utah Railway region. Davis currently acts as vice president-field operations of the company's Rail Link subsidiary.
For the 12 months ending June 30, Utah Railway reported approximately $23.7 million of revenue, according to Genesee & Wyoming. Utah Railway Company currently serves three principal business segments:
A unit coal train business. The operation involves primarily shipping low sulfur, high BTU coal to utilities in Utah and Nevada as well as to export and other industrial markets.
A switching service for Burlington Northern Santa Fe.
The Salt Lake City Southern Railroad. The operation serves industrial customers in the Salt Lake City area.
Genesee & Wyoming representatives project that the Utah Railway acquisition will be immediately accretive to the company's earnings per share. Genesee & Wyoming initially plans to fund the acquisition under the company's existing $103 million revolving credit facility, indicated the officials. As of the June 30 pro forma for Utah Railway, Genesee & Wyoming's total debt to capitalization registers at approximately 36.2 percent.
The boards of directors of Genesee & Wyoming and Mueller have approved the transaction, subject to regulatory approval as well as customary closing conditions.
The acquisition of Utah Railway is expected to be completed by the end of third quarter 2002.
Genesee & Wyoming also announced that the company has received an underwriting commitment from Fleet National Bank for $250 million in senior secured credit facilities, subject to customary conditions.
Fleet's commitment provide access to capital for general corporate purposes, including additional acquisitions, explained the company representatives.
Genesee & Wyoming expects that the syndication of the facilities to a broader group of lenders will commence shortly after the closing of the Utah Railway acquisition and will be completed approximately 30 days thereafter.
"The Utah Railway has provided 90 years of excellent service to the coal producing region of Utah and has been well operated by its parent company. In recent years, it has increased its presence by providing switching for BNSF and by the acquisition of the Salt Lake City Southern Railroad," commented Mortimer Fuller, Genesee & Wyoming chairman and chief executive officer.
"As our most significant domestic acquisition to date, we believe that under our ownership we will be able to build upon the long history of Utah and create new opportunities for growth," added the chairman and chief executive officer.
Genesee & Wyoming operates short line and regional freight railroads in the United States, Canada, Mexico, Australia and Bolivia.
The company provides freight car switching and related services to industrial companies with extensive railroad facilities within complexes.
Genesee & Wyoming operates in five countries on three continents with more than 8,000 miles of company owned and leased track.
The company also operates over an additional 2,700 miles under track access arrangements.