• CSX to acquire Pan Am Railways

  • Guilford Rail System changed its name to Pan Am Railways in 2006. Discussion relating to the current operations of the Boston & Maine, the Maine Central, and the Springfield Terminal railroads (as well as the Delaware & Hudson while it was under Guilford control until 1988). Official site can be found here: PANAMRAILWAYS.COM.
Guilford Rail System changed its name to Pan Am Railways in 2006. Discussion relating to the current operations of the Boston & Maine, the Maine Central, and the Springfield Terminal railroads (as well as the Delaware & Hudson while it was under Guilford control until 1988). Official site can be found here: PANAMRAILWAYS.COM.

Moderator: MEC407

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  by eolesen
 
Seems like PAR needed this merger more than CSX did. What happens if CSX walks away from the table? STB turned it down, so I can't imagine any financial or breakup penalties would kick in.

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  by ShortlinesUSA
 
I don't dispute what you've written below; however, I see one big underlying issue-- VRS probably can't afford to buy PAR. Only the largest shortline holding companies and Class 1s typically have access to the level of capital needed to pull off a transaction of this size.
steam1246 wrote: Sat Jun 12, 2021 5:39 am There is a better solution. Over a year ago, a new railroad was authorized to operate /in NH by the STB: the Merrimack & Grafton RR, an affiliate of the Vermont Rail System. To date, VRS has acquired the New England Southern RR--and not much else has happened, thanks to the Pan AM/CSX sale entering the picture. Anyone familiar with VRS knows they DID NOT buy NEGS for two cars of slurry per month to 3M in Tilton! In fact, the $5 million Per year annual revenue the STB approved for the Merrimack & Grafton was based upon "cooperative freight efforts" with Pan Am. VRS, with a 50-year-plus proven record of customer-based rail service In Vermont and New York, would be a much better choice for "taking trucks off the highway" in NH than CSX. Wake up NH--there is a better way for the future of rail freight in south central NH than CSX!
  by NYC27
 
eolesen wrote: STB turned it down, so I can't imagine any financial or breakup penalties would kick in.
A non-refundable down payment is pretty standard in these type of transactions.
  by eolesen
 
Yeah, but those down-payments or breakup fees are usually only enforced when someone voluntarily walks away from a deal.

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  by roberttosh
 
In essence, wouldn't CSX still be walking away at this point since the acquisition wasn't flat out rejected, but instead designated as a significant transaction? Either way, I don't anticipate CSX backing out as I'm under the impression that they consider this an excellent opportunity for longterm growth.
  by jamoldover
 
Despite the headlines, CSX's application was not rejected. All that happened was that the STB said "What you've submitted is incomplete. We need more information. Here's what we need more information about." In response, CSX said "OK - we'll be submitting the additional information. We expect to have that to you by July 1st."

What about that would lead anyone to think that CSX would want to back out of this or that the STB wasn't going to allow it to happen? If you're going to comment on what the STB said, read what they actually said.
Last edited by MEC407 on Mon Jun 14, 2021 7:29 am, edited 1 time in total. Reason: unnecessary quoting
  by eolesen
 
Turning it into a significant transaction implies there's a price to be paid for approval. Who knows what concessions STB will seek, but if start to outweigh the benefits, CSX may choose to walk away.

Remember that PAR put themselves up for sale for a reason, and CSX was the only one who stepped up with an offer.

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  by F74265A
 
Given that pan am is a private company, there is no way to know who else, if anyone, submitted a bid. All that we know from public info is that csx was selected as the winning bid. As noted above, csx said that they intend to submit a revised stb application which, to me, sounds like the opposite of walking.
  by MEC407
 
eolesen wrote: Sun Jun 13, 2021 7:04 pm Remember that PAR put themselves up for sale for a reason, and CSX was the only one who stepped up with an offer.
Source?

CSX was clearly the winning bidder but that doesn't mean they were the only bidder...
  by bostontrainguy
 
roberttosh wrote: Sun Jun 13, 2021 3:01 pm In essence, wouldn't CSX still be walking away at this point since the acquisition wasn't flat out rejected, but instead designated as a significant transaction? Either way, I don't anticipate CSX backing out as I'm under the impression that they consider this an excellent opportunity for longterm growth.
Reading recent reports that CP is finding that its expansion into the northeast region is generating business above and beyond expectations, CSX would be foolish to let this go. They'll get this done.
  by FatNoah
 
VRS probably can't afford to buy PAR. Only the largest shortline holding companies and Class 1s typically have access to the level of capital needed to pull off a transaction of this size.
No they can't, but they can probably get some concessions, such as operating Nashua or Lowell northward in return for dropping their opposition to the merger. At least that's my wishful thinking. ;)
  by newpylong
 
eolesen wrote: Sun Jun 13, 2021 7:04 pm Turning it into a significant transaction implies there's a price to be paid for approval. Who knows what concessions STB will seek, but if start to outweigh the benefits, CSX may choose to walk away.

Remember that PAR put themselves up for sale for a reason, and CSX was the only one who stepped up with an offer.

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CSX has already made enough concessions above and beyond what should be required to purchase the place.

I can't see the STB seeing this as anything other than for the benefit of the public in the end and it will be approved. It is a pretty bulletproof application, once they actually provide the data the STB is looking for.

They were not the only offer by the way.
Last edited by newpylong on Mon Jun 14, 2021 10:08 am, edited 1 time in total.
  by newpylong
 
steam1246 wrote: Sat Jun 12, 2021 5:39 am Wake up NH--there is a better way for the future of rail freight in south central NH than CSX!
There are a lot of "better" solutions than CSX operating the NH trackage, but they are the ones in the Application. Whether the state wants to pick someone else to purchase it is irrelevant.
  by artman
 
eolesen wrote: Sun Jun 13, 2021 7:04 pm Turning it into a significant transaction implies there's a price to be paid for approval. Who knows what concessions STB will seek, but if start to outweigh the benefits, CSX may choose to walk away.
I find it highly likely that CSX expected this would be declared a significant transaction, but submitted for the lower classification just to see if it would go through. Why not? Nothing to lose trying...
  by PBMcGinnis
 
As posted earlier in the thread, there were at least 6 applicants who put in a bid for Pan Am, including CSX and NS.
CSX was the highest bidder. They saw value in the traffic Pan Am has out of Maine and the Canadian Maritimes.
They were well aware of what roadblocks and concessions NS, VRS, G&W etc. would make. Nothing shocking so far. CSX had applied for this as a minor transaction since the precedent was set in the early 2000s when CN bought Wisconsin Central. That was the last time a Class One carrier acquired a Class Two Regional Carrier.
Now that STB changed their minds on what is a minor versus major transaction, there are just a few more paperwork submissions to be made. They aren't backing out of this opportunity anytime soon.
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