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Rail News Home Rail Industry Trends

6/9/2010



Rail News: Rail Industry Trends

Genesee & Wyoming to acquire Australia's FreightLink franchise


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Yesterday, Genesee & Wyoming Inc. (GWI) announced it signed an agreement to acquire the assets of FreightLink Pty Ltd., Asia Pacific Transport Pty Ltd. and related corporate entities for $277.2 million, plus the assumption of debt totaling $1.4 million. GWI also expects to incur transaction-related expenses of $19.1 million associated with an Australian asset transfer tax.

Pending customary closing conditions, the acquisition is expected to close in the fourth quarter.

FreightLink, which has been in receivership since November 2008, owns and operates a 1,400-mile line between Tarcoola and Darwin, Australia, that links the Port of Darwin to an interstate rail network in South Australia. The company handles about 60,000 carloads per year, and manages a fleet of 23 locomotives and 430 rail cars.

GWI plans to operate FreightLink as part of its Australia region, Genesee & Wyoming Australia (GWA), which is based in Adelaide, South Australia. GWA has managed FreightLink’s “above rail” services since its inception in 2004 and currently leases locomotives and cars to the company, provides most crews and oversees train operations.

GWI — which owns and operates 62 regionals and short lines in the United States, Canada, Australia and the Netherlands — plans to work with FreightLink’s intermodal and mining customers to grow revenue and traffic.

“While FreightLink is in receivership due to its original financial structure, the railroad is a high-quality asset that is of great importance to the development of the mining industry in the Northern Territory and South Australia, as well as a vital transportation link in the Adelaide to Darwin corridor,” said GWI President and Chief Executive Officer John Hellmann in a prepared statement. “We believe that the rail line will continue to be a catalyst for unlocking major new mining projects that were not economically feasible without it. As countries such as China and India continue their long term trajectory of industrialization, we expect to see direct benefits to the FreightLink minerals franchise.”

Meanwhile, GWI also reported yesterday that May carloads totaled 71,659 units, up 19 percent compared with traffic in May 2009. Farm and food products traffic increased primarily because of higher grain volumes in the Australia and Canada regions.


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