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8/16/2006



Rail News: Rail Industry Trends

STB gives DM&E green light to create subsidiary for Powder River Basin project


The Surface Transportation Board has approved the Dakota, Minnesota & Eastern Railroad Corp.’s (DM&E) request to form a subsidiary to build and operate a 260-mile rail line through western South Dakota and eastern Wyoming into the Powder River Basin (PRB).

The $6 billion project also includes upgrading 600 miles of other lines in South Dakota and Minnesota. The STB’s ruling will enable the DM&E to create the Wyoming Dakota Railroad Properties Inc. subsidiary, giving the regional more flexibility with financing options for the new construction portion of the project without impacting the railroad’s existing finances, according to a prepared statement. The approval also improves DM&E’s chances of obtaining financing beyond the $2.5 billion Railroad Rehabilitation and Improvement Financing loan it applied for from the Federal Railroad Administration, according to the railroad.

“We have to attract a lot of private financing regardless of the outcome of the roughly $2 billion FRA loan,” said DM&E President and Chief Executive Officer Kevin Schieffer. “[This] victory will expand the universe of investors and provide more flexibility in structuring some of the $4 billion in private capital investment. ”


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