Norfolk Southern Railway Co. has agreed to buy nearly all of the assets of the Cincinnati Southern Railway, an approximately 337-mile-long railroad that runs from Cincinnati, Ohio to Chattanooga, Tennessee.
The city of Cincinnati currently owns the railroad, which is operated by the Cincinnati, New Orleans and Texas Pacific Railway Company (CNOTP), a wholly owned subsidiary of Norfolk Southern Railway, under a lease agreement expiring in 2026.
The agreement provides the company ownership of approximately 9,500 acres of land that sits under infrastructure maintained and operated by Norfolk Southern. Norfolk Southern officials said that because they will own the line in perpetuity, it eliminates uncertainty around future lease costs.
The line is one of the highest-density segments of the company’s network, with as many as 30 trains a day traveling the route.
“The Cincinnati Southern Railway is a critical artery linking the Midwest and the Southeast and plays an important role in our powerful network that serves more than half the U.S. population,” said Norfolk Southern President and Chief Executive Officer Alan H. Shaw. “This agreement sets the framework for Norfolk Southern to own a core line in our network in perpetuity, allowing us to advance our strategic objectives of improving service, enhancing productivity, and creating an even stronger platform for accelerated growth, all while eliminating uncertainty around future control of the line and lease costs.”
Upon the close of the transaction, projected to occur in the first half of 2024, the City of Cincinnati will receive cash consideration of approximately $1.62 billion.
Norfolk Southern intends to finance the transaction through a combination of internal and external sources. The city of Cincinnati plans to use the proceeds of the transaction to form an infrastructure fund that will benefit the citizens of Cincinnati for generations to come.
The trust would solely fund the rehabilitation, modernization, or replacement of existing infrastructure such as streets, bridges, municipal buildings, parks, and green space. The closing is subject to certain conditions, including approval by the voters of Cincinnati and the U.S. Surface Transportation Board.
