D&H up for sale?!

ccutler wrote:Taxes in NYS are the highest in the country for railroads.

When I started with the NYS Legislature as Counsel in 2007, I was their counsel for Real Property tax. I was reading our files on this very subject when I was called into a meeting, only to find out I was being transferred as counsel to Insurance. I was excited reading the files as I thought I actually might have a chance to change this and make a difference. I had the files for all of 2 hours!

Oh well...

conrailsharedassets wrote:It has been brought to my attention, that CP's Delaware and Hudson may be on the market. The sum I heard was $25,000,000 (which seems a little low to me). Apparently CP has stated the D&H is losing them money and they are no longer interested in it. This may very well be the case, as alot of the MOW/Signal work that was planned is now either on hold or cancelled and CP's trains have been steadily shrinking.

Source of this info, please? I couldn't find anything on CP's web site about this.

Obviously the most interested party is supposedly Norfolk Southern, but they from what I was told feel the price is too high? (Again this seems odd).

Can you please cite the source from Norfolk Southern who told you this?

Other interested parties are Canadian National (just as they have been in the past) and even Reading and Northern RR (but the price is too high for the regional RR).

I couldn't find anything on CN's or RBMN's web sites about their interest in D&H.

I'm just passing along what I heard so please DO NOT shoot the messenger. Lets try to keep the conversation civil. I was just curious if anyone has heard anything to confirm and or prove what I was told right or wrong?

Jim, since you don't cite any sources of your information, I don't think there's anything to this. Nothing against you, but I wouldn't be the "messenger" if I didn't know who was providing me the message. Please provide sources and citations for the info posted above, as many share your interest in the topic... But please don't post supposition as fact.

-otto-

blockline4180 wrote:I also heard "rumors" from "employees in the know" that CSX was making offers as well...This could get very interesting!

Why would anyone beyond the board of directors and the executives be privy to sensitive information like a possible railroad acquisition?

-otto-

IIRC....Guilford bought the D&H for $500,000, valued it at $68,000,000, then sold it to CP for $25,000,000. So the above speculated price tag is not totally out of line, other than taking into consideration how much money CP has put into the line. Question to ponder: would the sale likely have to go to an already operating entity as there are really no more "D&H" locomotives left to operate the railroad? Note : not D&H painted locomotives, but actually D&H owned locomotives...

Otto,

Your website (railroad.net) is a wonderful source of RR information that I have thoroughly enjoyed being a part of since I officially joined a little while ago. However, as of late the whole point of a forum has been totally forgotten. Forums are places for people with similar interests (in this case trains) to discuss possible and current railroad happenings. If we are not able to discuss something that was "said" and not neccessarily fact, what is there to discuss? Most of us are railfans not railroaders and we don't get anything in the way of information until we hear or see something from someone "in the know" at the railroad. I heard something from a few people I know in the railroad industry (Never would I give out their names). Giving out the name of your source in the railroad industry can lose people their jobs and is probably one of the most irresponsible things anyone can do. With that said, I intended this to be a discussion of possibilty based on hear-say from "proffesional railroaders accounts"... NOT anything based on fact. You wont find anything on the websites of any railroad that may be involved, as this is probably trying to be kept as hush hush as possible. But at the same time, if something gets leaked (like it did in this situation) there is nothing wrong with posting and discussing it on a group such as this.

Its too bad that a harmless discussion such as this has turned into a facts are neccessary discussion!

Anyway have a Very Merry Christmas Everybody!

Jim Cerulli
cprsunburysub yahoo group Moderator

This rumor started on NS's first day in town. I have no doubt that NS has interest in the D&H but wether CP has it up for sale right now nobody here knows. CP MOW has been out working. Bevier St. Yard in Binghamton was just redone moving the Binghamton runner over next to the Buffalo Rnr and now all 4 yard tracks are next to each other on the east side (for sand off loading). Monday thru Friday there is MOW out doing work (at least north of Binghamton). The question is what MOW projects were stopped. It is winter and MOW projects are limited this time of year.

IF another railroad got a hold of the D&H, there is work to be done. There are alot of speed restrictions on the line due to track conditions. The line needs some work to have it all up to 40mph. CP has done a lot of cheap fixes over the years and they don't seem to go back and finish what they start (or for that matter, maintain what they have done). One thing is for sure, 2011 looks to be a very interesting year for the D&H and the old Erie!

conrailsharedassets wrote: If we are not able to discuss something that was "said" and not neccessarily fact, what is there to discuss?

Then what would remain would be fact, I assume.

With that said, I intended this to be a discussion of possibilty based on hear-say from "proffesional railroaders accounts"... NOT anything based on fact.

Tall tales and ghost stories are good for campfires!

You wont find anything on the websites of any railroad that may be involved, as this is probably trying to be kept as hush hush as possible. But at the same time, if something gets leaked (like it did in this situation) there is nothing wrong with posting and discussing it on a group such as this.

I'm sorry we disagree, but when we start discussing things like earnings, profits and losses, those are indeed reportable figures. Someone said the D&H is losing money... Show me the figures you saw that lead to that conclusion.

Railroads do not operate in shadowy dark alleys... If the railroad was inde for sale, it would be a matter of public record so that interested parties would be able to make bids... Otherwise, how would they know to make a move? "psssst! Ya wanna buy the D&H? Don't tell nobody we wanna sell it, but if you're interested, I can make ya a deal! CHEAP!"

This is my observation: I have a feeling we would be seeing a lot more activity on many fronts if any kind of sale was about to happen. There would be STB filings, unions would be aligning work agreements, banks would be arranging funding, and I am pretty sure New York State and Pennsylvania would weigh in with their opinions about an impending change at the D&H.

Otto

Otto Vondrak wrote: Railroads do not operate in shadowy dark alleys... If the railroad was inde for sale, it would be a matter of public record so that interested parties would be able to make bids... Otherwise, how would they know to make a move? "psssst! Ya wanna buy the D&H? Don't tell nobody we wanna sell it, but if you're interested, I can make ya a deal! CHEAP!"

Probably true, but if you think a business would post consideration of a strategic move of such a nature on their website, then you clearly are in campfire and ghost story territory. B2B leases and transactions take place constantly outside the scope of the public eye. Clearly to maximize return on investment an all-out sale would eventually become public, and being strictly governed by Federal regulations, a railroad transaction would be so publicized. But to think that CP wouldn't discreetly shop the line around or discuss other alternatives at high levels (which could trickle down and become "rumors") is naive to say the least.

Noel Weaver wrote:Sounds to me like the "rumor mill" is at work again. Often rumors start among the troops and often die among the troops too. It might happen but don't bet on it.
I think this would make a lot more sense for the NS than for CSX but it might not make sense for either one of them.
Noel Weaver

I'm a page behind, but Noel is absolutely right. When I was in the Gulf, you should have heard the rumor mill. Best thing to do was to ignore it.

Now, I'm not caught up on the thread, and in deference to the OP, this may not be the rumor mill.

I don't have time, but maybe someone should set up a Google News Alert for "D&H Sale". Or follow the Mergers blog in the WSJ. Or maybe email one of their reporters.

Again, I don't have time. Enjoy.

Jim,

Otto may not have seen my initial query as to source. There is no harm in continuing the discussion, but generally, people here who are curious are going to ask what the source is.

You don't have to tell us who, and like I said, I generally frown on that anyway. Not that we're a news org, but I don't want anyone who says something in passing to get in trouble, i.e. "thrown under the bus".

You've told us employees; people will make their assessment based on that. I think that's all that's being said here.

We value your continued contribution.

Jeff
Site Admin

conrailsharedassets wrote:Otto,

Your website (railroad.net) is a wonderful source of RR information that I have thoroughly enjoyed being a part of since I officially joined a little while ago. However, as of late the whole point of a forum has been totally forgotten. Forums are places for people with similar interests (in this case trains) to discuss possible and current railroad happenings. If we are not able to discuss something that was "said" and not neccessarily fact, what is there to discuss? Most of us are railfans not railroaders and we don't get anything in the way of information until we hear or see something from someone "in the know" at the railroad. I heard something from a few people I know in the railroad industry (Never would I give out their names). Giving out the name of your source in the railroad industry can lose people their jobs and is probably one of the most irresponsible things anyone can do. With that said, I intended this to be a discussion of possibilty based on hear-say from "proffesional railroaders accounts"... NOT anything based on fact. You wont find anything on the websites of any railroad that may be involved, as this is probably trying to be kept as hush hush as possible. But at the same time, if something gets leaked (like it did in this situation) there is nothing wrong with posting and discussing it on a group such as this.

Its too bad that a harmless discussion such as this has turned into a facts are neccessary discussion!

Anyway have a Very Merry Christmas Everybody!

Jim Cerulli
cprsunburysub yahoo group Moderator

A few things worth considering with M&A activity:

1. What is the railroad worth? Depends on how the acquirer values it. Could be worth the asset book value or less, especially if they're in money trouble. Could be worth the present value of the future cash flows if they're in good shape. And it could be worth more than that, if the acquirer sees more value in it - if a new owner could somehow double profitability or some similar radical change, the value is higher, especially when the current owner knows about the radical change. A good example of this is EMD - the private equity owners knew Cat could do wonderful things with EMD because Cat has lots of capital and resources, where an independent EMD doesn't. That's why GM sold it for $250m and Cat bought it for $800m. They don't build 4x more locomotives now than 2005, it's just worth more to new owners at Cat.

2. How does M&A happen? CP is publicly held, but that doesn't mean they have to hold a public meeting in the initial phases of the deal. Many times it's very hush-hush. That's why when CSX and NS broke up Conrail, David LeVan had to be called back from vacation - the talks were progressing without him because they were secret. The process usually goes like this: talks, handshake agreement, numbers crunching, approval by board of directors, due dilligence, evaluation by outside firms (law, accounting, banking), announcement. Usually, the union bosses are consulted at some stage (just as they were with the last few rail mergers) and the laywer, bankers, and accountants are brought in. At some point, word is bound to leak but the source stays quiet for fear of retribution. Want a 90 minute lesson on M&A? Watch "Barbarians at the Gate" or "Other Peoples' Money". They're not exact and not completely realistic, but reasonably close. Sometimes leaks happen because one party wants what another party won't give them, and we all find out early.

Does this really mean D&H is for sale? We have no idea. Frankly, with a public corporation, anything is for sale for the right price. It's management's job to maximize shareholder value. If Alpo Dog Food wanted to by UPRR and offered 50% over historic share price highs, it could happen [pending regulatory approval and arrangement of financing] despite being a really illogical idea. Keep in mind, ICG was owned by a chocolate company, BAR was owned by a towel company, and MEC was owned by a filter company.

A little food for thought.

Hi Everyone,

The above post has certainly explained the possible situation with the D&H very well.

I have no new information on the possible sale/partial sale of the D&H. However I can tell everyone that there is alot of fellow railfans and railroaders telling me they have heard many similar items as to what I have heard about the D&H.

We shall be finding out soon exactly what is going on. But one thing we can be certain of, there is sure to be some serious change in Northeast Railroading in 2011.

Jim Cerulli
cprsunburysub yahoo group Moderator

conrailsharedassets wrote: But one thing we can be certain of, there is sure to be some serious change in Northeast Railroading in 2011.

Can we be certain? Source of this info, please. A statement like yours is dangerous- after all, railroads don't operate in dark alleys, corner taverns, and the like. I think you're posting suppositions as fact again.

(The above was intended as sarcasm/kidding, but I wouldn't be surprised to see a similar post made in a serious manner based on my many years of lurking on this forum).

This idea, while not necessarily this topic, comes up time and again.

XXX railroad is for sale, and I heard it on good authority! I swear!

Railroad personnel are notoriously talkative, and this is great reason to believe that this is much ado about nothing. To whit:

1. Personnel love to play with foamers by spreading stuff. It's like that old John Edwards phony: he hears just a bit about what you might want to know, and then expands quite a bit to fill in the blanks. Presto! The story you wanted to hear!

2. When something really IS going to happen, the same personnel leak the good stuff. I'm hearing none of it.

So, what have we?

A: There's just so much hooey going on here. The D&H has been a money loser for a very long time, dating back to when I 'fanned it in the 80's and 90's. It remains viable as a bridge route to something greater...which, coincidentally, both CSX and NS could conceivably use.

B: When something is really going to happen, you'll hear specifics, like crew points, bids going out, etc.

I'm with Otto on this one. I do have one caveat, though: when the whole Patriot Corridor happened, one posted (whose name I cannot remember) had a lot of information from the get go, and started very vague, like here, and then got real specific, real fast. I'm sure I was one of the pooh-poohers that doubted it all...and then the ball was rolling fast.

Respectfully, I don't think Jim's story has the horsies to go the distance.

Dave Becker

And that's the whole point of the story; we'll all see if it pans out, and no one should hammer Jim for posting what he's heard. Sometimes these things have legs, sometimes they don't. And if they don't, it's not necessarily the OP's fault; sometimes these things just die due to a change in direction or personnel involved.

Sometimes, it's just a "stalking horse". Wasn't the whole CR-NS-CSX deal kind of that way? They just get a life of their own and spin out of control. Although not railroad-related, I believe there was a whole book/movie thing on RJR back when.