Genesee & Wyoming seeks to shrink its short-line entities via two internal mergers
1/5/2023
By Jeff Stagl, Managing Editor
Genesee & Wyoming Inc. (G&W) is the largest short-line holding company in North America, directly or indirectly controlling 103 railroads in the United States alone that operate in 42 states.
But after the company completes two internal transactions in the near future, its U.S. roster will be trimmed by two short lines.
G&W is seeking a Surface Transportation Board exemption from certain governance provisions to merge Chattahoochee Bay Railroad Inc. (CHAT) into The Bay Line Railroad LLC (BAYL), and merge Fordyce and Princeton Railroad Co. (FP) into the Arkansas Louisiana & Mississippi Railroad Co. (ALM). The transactions are expected to be completed by Feb. 1.
The mergers only involve Class III railroads, would not change any rail operations and would not affect any employees, G&W officials said in an STB filing. Moreover, there would be no adverse changes to service levels for shippers or changes in the competitive balance with carriers outside of the G&W corporate family, they added.
The Chattahoochee Industrial Railroad will be absorbed by The Bay Line Railroad, which operates 182 miles of track in Alabama and Georgia, and interchanges with CSX.Genesee & Wyoming Inc.
The company is pursuing the transactions to reduce the number of legal entities in its corporate family to improve efficiencies by reducing overhead and duplicated services, and to gain potential tax savings while maintaining the same number of assets.
“The proposed mergers would allow us to more effectively manage these operations as well as reduce costs related to accounting and IT support for these railroads,” said G&W Vice President of Communications Tom Ciuba in an email. “As stated in the filing, the operations, service and employment levels won’t change.”
Currently operating as the Chattahoochee Industrial Railroad, CHAT operates 27 miles of track, mostly between Hilton and Safford, Georgia. The short line interchanges with BAYL, CSX and the Hilton & Albany Railroad. BAYL operates 182 miles of track in Alabama and Georgia, and interchanges with CSX and the Hilton & Albany Railroad.
G&W indirectly controls BAYL through its wholly owned subsidiaries Rail Partners LP and RP Acquisition Co. Two. The holding company formed CHAT in 2006 to acquire certain assets from H&S Railroad Co. Inc. and Chattahoochee & Gulf Railroad Co. Inc.
Now, G&W plans to merge CHAT into BAYL under Delaware and Alabama laws, with BAYL remaining as the surviving Class III entity, company officials said in the STB filing.
Chattahoochee Bay Railroad Inc. — which interchanges with The Bay Line — operates 27 miles of track, mostly between Hilton and Safford, Georgia.Genesee & Wyoming Inc.
G&W officials recently determined that the company needs to undertake certain internal restructuring transactions to facilitate the CHAT-BAYL merger. So, CHAT will be converted into a limited liability company under Delaware law.
G&W then plans to contribute the membership interests in CHAT — down its organizational structure — to subsidiary Rail Partners, resulting in indirect control of CHAT. As a result, Rail Partners will control both CHAT and BAYL.
FP operates 57 miles of track between Fordyce and Crosset, Arkansas, and interchanges with Union Pacific Railroad. ALM operates 71 miles of track in Arkansas and Louisiana, and interchanges with Kansas City Southern and UP.
G&W acquired control of both FP and ALM in 2004 through the acquisition of each railroad’s stock from Georgia Pacific. The short lines will be merged under Delaware and Arkansas laws, with ALM remaining as the surviving Class III entity, G&W officials said in the STB filing.
