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Rail News: Short Lines & Regionals

Watco to serve six major Dow chemical plants in the U.S., Canada


Watco Cos. LLC has reached an agreement with Dow Inc. to acquire the major chemical producer’s rail infrastructure assets and related equipment at six major North American facilities.

Watco will provide select rail services at Dow's plants in Freeport and Seadrift, Texas; St. Charles and Plaquemine, Louisiana; and Fort Saskatchewan and Prentiss, Alberta.

"We are grateful for the confidence Dow has shown in Watco by trusting us with this critical role,” said Watco Chief Executive Officer Dan Smith in a press release. “This represents a revolutionary approach to industrial in-plant rail operations and we're proud to help Dow create value for many years to come."

North America’s largest olefins and polyethylene manufacturer, Dow expects to receive more than $310 million in cash as part of the transaction, which is expected to close in the fourth quarter pending customary closing conditions. Fourteen Dow employees and management responsibility for about 400 contract workers are expected to transition to Watco after the transaction closes.

Watco’s significant rail expertise and capabilities will generate additional operational efficiencies and provide growth opportunities over time, Dow officials said. The transaction aligns with the company’s strategy to continue to grow core businesses in a capital-efficient manner, they said.

“The transaction will liberate cash from our balance sheet that we will use to pay down debt and invest in our core value-generating businesses,” said Dow Chairman and CEO Jim Fitterling.

To execute the transaction, Watco plans to partner with the transportation infrastructure group that manages an infrastructure investing strategy and funds for Oaktree Capital Management L.P., a Watco investor.

Contact Progressive Railroading editorial staff.

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