PBMcGinnis wrote:The Dark Horse had 11 years to get off the pot. And they were given the opportunity at first crack before the official announcement back in June that Mellon was putting it up for sale..
Is it the case that NS had the right to buy out PAR's interest in PAS at any time over the 11 years? My sense is that that is unlikely to be the case. And you can be sure that Mellon would have demanded a pretty penny had NS shown interest in buying out his half.
Regarding a 'first crack' earlier this year - not knowing anything of the specifics of the PAS agreement, I would imagine that the agreement likely provides that, if either party wants to sell their interest, the other partner has the opportunity to buy it - at a price specified by the selling party
- before it goes to market. (Yes, this is pretty much unbridled speculation - but would be a very sensible way to draft the agreement.) Typically the way this would work is that the Selling party sets a price; the other party says Yes or No at that price; if they say No, and the selling party finds a buyer of that interest at less than some percentage of the originally offered price (something like 90% might be normal), then they get another crack at it. Mr McGinnis, you seem to have a good amount of inside knowledge - do you know if NS refused to buy out the PAR interest in PAS at all
? Or did they turn it down at a specific price
? There's a world of difference between those two alternatives...
And if my speculation above is correct, it would require that CSX allocate their proposed purchase price between the PAS portion and the PAR portion. In thinking that through, it seems to me that it would be in CSX's interest to inflate the portion of the price allocated to PAS.