RailAmerica Inc has signed an agreement to acquire the assets of three ‘short-line freight railroads’ in Alabama.
The total purchase price is $12.7m.
The transaction is expected to close in the second quarter of 2011 and is subject to customary closing conditions including regulatory approvals.
The three railroads, known as the Three Notch Railroad, the Wiregrass Central Railroad, and the Conecuh Valley Railroad are currently owned by affiliates of Gulf and Ohio Railways Inc.
Each of the three lines interchanges with CSX Transportation and serves customers shipping primarily agricultural and manufactured products.
Collectively, the three lines hauled approximately six-thousand carloads of freight during the fiscal year ended 2010.
RailAmerica President and CEO John Giles said:
“We are pleased to add these high-quality assets to our existing Alabama rail franchise. We look forward to partnering with new and existing customers on the line and with the local community to continue growing business on these lines.”
For the next twelve months, RailAmerica anticipates these railroads will generate approximately $3.7 million in revenue, $1.2 million in operating income and $0.7 million in depreciation and amortization. RailAmerica intends to use cash on hand to finance the purchase.
