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RAIL EMPLOYMENT



Rail News Home M&A

11/28/2005



Rail News: M&A

BNSF, South Dakota settle on new purchase price for state-owned line


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Last week, BNSF Railway Co. and the state of South Dakota reached a settlement under which the state will sell a 368-mile line between Aberdeen and Sioux City to the railroad for $40.3 million. The settlement is subject to the dismissal of all pending litigation and Surface Transportation Board approval.

The parties previously agreed on a $42.5 million purchase price in May, but they adjusted the value of the properties sold by the state, accounted for track improvements that will be made by both BNSF and the state, and considered additional track rental payments the Class I owed for 2005.

BNSF will build sidings in Alpena, Redfield and North Sioux City; the state and railroad will improve the Wolsey interchange and reconstruct the Napa Junction interchange; and the state will construct a siding north of Aberdeen. South Dakota officials expect the state to spend $6.5 million on track improvements during the next several years. BNSF also agreed to grant regionals and short lines access rights to the line.

“This is access to worldwide markets that our smaller carriers have never before had," said South Dakota Gov. Mike Rounds in a prepared statement.

After purchasing the line from the Milwaukee Road in 1980, the state contracted BNSF to provide rail service for five years. In 1986, BNSF agreed to continue operating the line and the state agreed to sell the line to the railroad. However, disagreements on ownership and service issues led to two lawsuits, which have held up the line’s sale.


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