Genesee & Wyoming Inc. earlier this month said it has signed an agreement with Pinsly Railroad Company of Westfield, Mass., to acquire certain subsidiaries that constitute Pinsly’s Arkansas Division for $40 million in cash, subject to adjustment for final working capital.
The acquisition is subject to customary closing conditions, including the expiration of the 30-day notice period required by the U.S. Surface Transportation Board for G&W to obtain authority to acquire the Pinsly Arkansas railroads. The transaction is expected to be completed in early January 2015.
Headquartered in Jones Mills, Ark., Pinsly Arkansas includes the Arkansas Midland Railroad (AKMD), which is comprised of seven non-contiguous branch lines; the Prescott & Northwestern Railroad (PNW); and the Warren & Saline River Railroad (WSR); as well as the two Arkansas transload operations of Pinsly’s Railroad Distribution Services subsidiary.
Operations are composed of 137 miles of owned and leased track, 70 employees and 16 locomotives and serve the Hot Springs and Little Rock areas, as well as the southwestern and southeastern portions of the state. The railroads currently haul approximately 35,000 carloads per year and serve a diverse customer base in industries including aluminum, forest products, aggregates, energy and carton board.
Pinsly Arkansas will be managed as part of G&W’s Central Region, which includes six existing short line railroads in the state of Arkansas, under the leadership of Regional Senior Vice President Dewayne Swindall. The acquisition will be funded from G&W’s revolving credit facility and is expected to be immediately accretive to G&W’s earnings per share.
In 2015, G&W estimates that Pinsly Arkansas will contribute approximately $5.4 million of EBITDA, including certain net cost savings. The entities being sold are subchapter S subsidiaries and as such the tax basis in the companies acquired will be stepped up to the purchase price.
G&W owns short line and regional freight railroads in the United States, Australia, Canada, the Netherlands and Belgium. In addition, G&W Australia operates the 1,400-mile Tarcoola to Darwin rail line, which links the Port of Darwin with the interstate rail network in South Australia.
Operations currently include 112 railroads organized in 11 regions, with more than 15,000 miles of owned and leased track, 5,000 employees and over 2,000 customers. G&W subsidiaries provide rail service at 37 ports in North America, Australia and Europe and perform contract coal loading and railcar switching for industrial customers.