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Rail News Home Short Lines & Regionals

April 2007

Rail News: Short Lines & Regionals

DM&E, R.J. Corman land RRIF loans

It isn’t the $2.3 billion the railroad had been counting on, but the Dakota, Minnesota & Eastern Railroad Corp. (DM&E) last month got the Federal Railroad Administration’s (FRA) thumbs up for a $48.3 million Railroad Rehabilitation and Improvement Financing (RRIF) loan. The FRA also approved a $58.9 million RRIF loan for the R.J. Corman Railroad Group.

The DM&E will use proceeds from the loan — the regional’s second after obtaining a $233 million RRIF loan in 2003 — to upgrade 134 track miles between Wall, S.D., and Colony, Wyo., to handle heavier freight cars hauling grain, ethanol and minerals.

The project calls for replacing 60 miles of rail between Wall and Owanka, and Whitewood and the South Dakota-Wyoming state line; repairing bridges between Wasta and Owanka and near Belle Fourche; replacing 55 track switches; installing 84,000 ties; building a 1.5-mile siding in Midland; and resurfacing 93 grade crossings.

“We’ll be replacing a lot of 100-year-old rail,” says DM&E President and Chief Executive Officer Kevin Schieffer, adding that the project will be completed by year’s end. “We have clay, cement and wheat traffic on the line, and the project will preserve that traffic for us, first and foremost.”

The FRA evaluated the loan “separately and independently” from the DM&E’s

application for a $2.3 billion RRIF loan to help fund its proposed Powder River Basin project, according to a FRA statement. In late February, the FRA denied the loan because it posed an “unacceptable credit risk for federal taxpayers.”

Loan to fund fleet additions
Meanwhile, R.J. Corman will use proceeds to rehabilitate 24 locomotives, purchase 200 new centerbeam flat cars and acquire 100 new coal hoppers. Owner and operator of nine short lines in Kentucky, Mississippi, Pennsylvania, Ohio, Tennessee and West Virginia, the company also will use a portion of the loan to refinance debt incurred from purchasing railroad property, facilities, cars and maintenance equipment.

Under the RRIF program, the FRA is authorized to provide $35 billion in direct loans or loan guarantees to eligible railroads (including $7 billion for regionals and short lines) or government authorities to acquire, develop, improve or rehabilitate intermodal or rail facilities.

— Jeff Stagl


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