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1/30/2003
Rail News: Rail Industry Trends
To reduce debt, RailAmerica opts to sell Chilean rail interests
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On Jan. 29, RailAmerica Inc. announced plans to sell its Chilean operations, comprising a 55-percent interest in 1,400-mile Ferronor and 57-mile Potrerillos Railway.
The short-line holding company hired investment banking group Credit Lyonnais Securities (USA) Inc. to market and complete the sale.
In 1997, RailAmerica purchased its Ferronor interest from the Chilean government. In January 2002, Potrerillos Railway began operations under an exclusive 15-year lease agreement with Codelco, the world's largest copper producer.
The railroads employ 200, and own 38 locomotives, 544 rail cars, and several thousand miles of land, track and associated real estate.
"Although our Chilean operations have performed exceptionally well, we are pursuing a strategic plan to reduce debt and focus on growing our core North American and Australian rail businesses," said Gary Marino, RailAmerica chairman, president and chief executive officer, in a prepared statement, adding that the proposed transaction would eliminate $19 million of Chilean debt from the company's balance sheet.
In 2002, the Chilean operations earned revenue of about $22 million. This year, RailAmerica expects revenue to increase 17 percent to $26 million.
"Since taking over the Chilean operation, we have doubled revenues while at the same time secured long-term transportation agreements that provide a solid base of guaranteed business for the next decade," said Marino. "However, Chile is only 5 percent of our total business."
Credit Lyonnais plans to distribute offering materials by the end of February.
The short-line holding company hired investment banking group Credit Lyonnais Securities (USA) Inc. to market and complete the sale.
In 1997, RailAmerica purchased its Ferronor interest from the Chilean government. In January 2002, Potrerillos Railway began operations under an exclusive 15-year lease agreement with Codelco, the world's largest copper producer.
The railroads employ 200, and own 38 locomotives, 544 rail cars, and several thousand miles of land, track and associated real estate.
"Although our Chilean operations have performed exceptionally well, we are pursuing a strategic plan to reduce debt and focus on growing our core North American and Australian rail businesses," said Gary Marino, RailAmerica chairman, president and chief executive officer, in a prepared statement, adding that the proposed transaction would eliminate $19 million of Chilean debt from the company's balance sheet.
In 2002, the Chilean operations earned revenue of about $22 million. This year, RailAmerica expects revenue to increase 17 percent to $26 million.
"Since taking over the Chilean operation, we have doubled revenues while at the same time secured long-term transportation agreements that provide a solid base of guaranteed business for the next decade," said Marino. "However, Chile is only 5 percent of our total business."
Credit Lyonnais plans to distribute offering materials by the end of February.
