Genesee & Wyoming to buy Ohio Central
USA: Genesee & Wyoming Inc announced on August 4 that it had signed an agreement to purchase the Coshocton-based Ohio Central Railroad System, which operates nine short lines in Ohio and Pennsylvania. GWI has agreed to pay US$219m in cash, and a contingent consideration worth approximately $25m.
GWI currently owns and operates 51 short line and regional railways in the USA , Canada, Australia and the Netherlands, and holds a minority stake in Bolivia's Empresa Ferroviaria Oriental.
The OCR deal is contingent upon approval from the state of Ohio for the transfer of an operating agreement covering one of the nine lines, but GWI hopes to take over the operations in the fourth quarter of this year. The nine lines are predicted to achieve revenues of around $70m in 2009, generating approximately $20m in operating income, against capital expenditure of $6m and amortization expenses of $12m.
Describing OCR as 'a welcome addition to the GWI family', CEO John C. Hellmann said it was 'a valuable regional franchise whose nine railroads serve a diverse customer base. Business development has been extraordinarily successful, and we look forward to further increasing shipments and strengthening the local economies.'
With a total of 716 route-km worked by a fleet of 64 locomotives, OCR's nine lines handle approximately 140 000 carloads of traffic each year.
The Ohio Central and Ohio Southern together form a 210 km route from South Glouster to Brewster. The Columbus & Ohio River runs for 260 km from Columbus to Mingo Junction with a 140 km route between Newark and Cambridge. Handling power station coal and landfill waste, these lines interchange with CSX, Norfolk Southern, Wheeling & Lake Erie , RJ Corman Railroad and Ohi-Rail.
OCR also operates more than 30 km of local trackage around Youngstown, including the Youngstown Belt, Youngstown & Austintown, Warren & Trumbull and Mahoning Valley, primarily serving the steel industry. The Pittsburgh & Ohio Central and Aliquippa & Ohio River operate another 80 km in the Pittsburgh area, handling cement, chemicals and ethanol traffic.