Alabama & Florida Railway

RailAmerica to Acquire Gulf and Ohio's Three Alabama Short Lines

4/11/2011 - Progressive Railroading

RailAmerica Inc. acquired Atlas Railroad Construction Co. last year, but it’s been more than five years since the company acquired any short lines. That stretch is over.

Today, RailAmerica announced it signed an agreement to acquire the assets of three Alabama short lines from Gulf and Ohio Railways Inc. for $12.7 million. The transaction — which includes the Three Notch Railroad (THNR), Wiregrass Central Railroad (WGCR) and Conecuh Valley Railroad (COEH) — is expected to close in the second quarter, subject to customary closing conditions, including regulatory approvals.

THNR operates 35 miles of track between Georgiana and Andalusia; WGCR operates a 20-mile line between Waterford and Enterprise; and COEH operates a 15-mile line between Troy and Goshen. All three short lines interchange with CSX Transportation and primarily serve agricultural and manufactured product shippers. Last year, the railroads hauled a total of 6,000 carloads.

“Collectively, the railroads have a solid customer base as well as a number of opportunities for further growth,” said RailAmerica President and Chief Executive Officer John Giles in a prepared statement. “Additionally, the railroads are clustered in close proximity to our existing Alabama operations, which we expect to create significant operating efficiencies.”

RailAmerica — which currently owns 40 U.S. and Canadian regionals and short lines — expects the Alabama short lines to generate about $3.7 million in revenue, $1.2 million in operating income, and $700,000 in depreciation and amortization during the next 12 months.

Progressive Railroading