RailAmerica Inc. soon will be back to 50. The short-line holding company Nov. 6 reached an agreement to acquire ParkSierra Rail Group for $48 million.
Napa, Calif.-based ParkSierra's three western short lines — coupled with eight short lines RailAmerica recently acquired from StatesRail — would return RailAmerica's railroad holdings to 50 regionals and short lines in the United States, Canada, Chile and Australia. The company earlier this year dropped to 39 rail holdings after completing several property sales transactions in late 2000 and early 2001.
RailAmerica plans to complete the ParkSierra transaction — comprising $23 million cash and assumed debt, and a $25 million common stock issue to ParkSierra shareholders — within 60 to 90 days pending regulatory approval and closing conditions. ParkSierra owns and operates 346-mile Arizona & California Railroad Co., 255-mile California Northern Railroad Co. and 150-mile Puget Sound & Pacific Railroad Co.
"We believe that the ParkSierra railroads are exceptionally well-run operations with strong cash flows and a solid base of customers — these railroads should be easily integrated into our existing base of Pacific Region railroads," said Gary Marino, RailAmerica chairman, president and chief executive officer, in a prepared statement.
ParkSierra Chairman and CEO Dave Parkinson believes the timing is right for the transaction.
"Right now there's a lack of opportunity for growth because the Class Is aren't spinning off properties in the West," he says. "All of our railroads are performing well — everything in life is timing and the time to do this is now when all is going right."
The two holding companies began serious negotiations in late summer; with fewer Class I line spin-offs, there're greater growth opportunities for short-line holding companies to negotiate transactions with other short-line holding companies, says Parkinson.
If the transaction is completed, ParkSierra would become part of RailAmerica's Pacific corridor region, along with several former StatesRail short lines.
"We're a good fit with RailAmerica because they already have investment in the West, and it would be a good cluster of short lines that could work well with each other and develop efficiencies," says Parkinson, who would act as a consultant to RailAmerica for one year to help develop strategic plans.
Beyond 2002, Parkinson plans to take life one day at a time: "I want to stay in the short-line and railroad industry because it's been good to me and I'm very oriented in that, but I have no set plans."
— Jeff Stagl
Source: Progressive Railroading Daily News
