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Rail News Home M&A

4/26/2004



Rail News: M&A

NS, CSXT seek SEC approval to restructure Conrail's debt, establish direct ownership


Norfolk Southern Corp. and CSX Transportation recently filed a registration statement with the Securities and Exchange Commission to establish direct ownership and control of their Conrail assets, and restructure Conrail's unsecured debt.

The railroads plan to exchange new unsecured debt securities and cash for Conrail's unsecured debt securities. Conrail is soliciting consent from its unsecured debt security holders to permit the restructuring.

In May 1997, NS and CSXT acquired 58 percent and 42 percent control of Conrail, respectively. They began operating their Conrail portions in June 1999.

Last November, the Surface Transportation Board ruled NS and CSXT could reallocate their Conrail assets in proportion to their ownership interests to "preserve competition" and clarify the Class Is' financial reporting. Remaining assets would continue to be managed and operated by Conrail.

If the Class Is exchange Conrail's unsecured debt, NS would be the obligor of $319 million in notes due June 15, 2020, and $145 million in notes due May 15, 2043; CSXT would be the obligor of $231 million in notes due June 15, 2020, and $105 million in notes due May 15, 2043. Morgan Stanley & Co. Inc. will serve as manager of the exchange offer and consent solicitation.


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