USA: FTAI Infrastructure has agreed to purchase The Wheeling Corp, owner of the Wheeling & Lake Erie Railway Co, from an entity controlled by Larry Parsons for $1·05bn in cash.
The W&LE is a Class II regional freight railway serving more than 250 customers along over 1 600 km of track in Ohio, Pennsylvania, West Virginia and Maryland.
The agreement announced on August 6 is subject to Surface Transportation Board approval. Once the transaction is completed W&LE will become an affiliate of FTAI Infrastructure’s Transtar railway group, which owns six Class III railways including Union Railroad Co which connects with the W&LE outside Pittsburgh.
A ‘remarkable transition’
W&LE said ’since 1992, under the leadership of Larry Parsons, we’ve undergone a remarkable transition from a distressed shortline to a high-performing regional carrier. Our growth has been defined by operational reinvestment, network expansion, and a steadfast focus on customer service, positioning us as one of the leading regional railroads in North America.
‘The decision to partner with FTAI and Transtar was made with the best long-term interest of our customers and company. FTAI brings both the resources and the strategic alignment necessary to support our continued growth across the W&LE and Akron Barberton Cluster Railway. We are still the Wheeling & Lake Erie — the brand remains unchanged, but we’re now part of something bigger that positions us to extend our reach. This acquisition unlocks new partnerships with our neighbours like the Union Railroad, and in an era where growth is defined by infrastructure, FTAI’s portfolio makes for a perfect match.’
Scale, diversification and network reach
FTAI Infrastucture invests in assets with high barriers to entry in the rail, ports and terminals and energy sectors. It is managed by an affiliate of Fortress Investment Group.
‘Growing our freight rail platform has been a key focus’, said FTAI Infrastructure CEO Ken Nicholson. ‘We believe the W&LE is an excellent candidate for a combination with Transtar, adding scale, diversification and network reach. Together, Transtar and the W&LE have identified several growth opportunities and operating efficiencies that we expect to drive substantial growth in revenue and EBITDA. As a result of these opportunities, we expect our combined freight rail segment to generate approximately $200m of annual Adjusted EBITDA by the end of 2026.’
Barclays and Deutsche Bank provided debt commitments and served as financial advisers to FTAI, Sidley Austin and Skadden, Arps, Slate, Meagher & Flom acted as legal advisers, and Calfee, Halter & Griswold and Fletcher & Sippel acted as legal advisers to W&LE.
