CSX Acquisition of Pan Am Railways

My thought is, if NS doesn't exercise whatever options it has to take full ownership (assuming it has that lever and does nothing), then by definition of a 50/50 ownership of PAS split between NS and CSX does it become defacto Conrail? The apparatus already exists in that fashion, so no need to setup something with additional overheads, SG&A ect.... surely you'll need some sales folks and train ops obviously, but beyond that the Conrail office can handle the rest. And again, you dont need proof of concept to the STB, you can literally put in the application, Pan Am Southern becomes Conrail and the Worcester - Keag line becomes CSX and they might spring on that knowing the point of Conrail is to balance the competition.

NYC27 wrote: ↑Tue Nov 17, 2020 12:08 pm PAR just got cleared to take F plates into the Produce Center so it is back on the table, especially with the cancellation of the RailEx trains. UP has essentially withdrawn all of the older C-plate reefers as of this year.

Was there some restriction recently removed? What changed?

Keolis removed a pipe from a bridge at Sullivan Square.

Am still hearing CSX is the front runner. They are flush with cash and want to ensure future control of NE traffic. They are reportedly pushing NS to buy out all of PAS but they don't seem to be interested. A third party may become involved there to fill that roll. CSX does not want another Conrail region.

This version of the story, if true, puts to rest the theory that a supposedly defective Hudson River bridge is the motivation. Who would want the other 1/2 of pas if not NS? Cp or GW would fit as logical, connecting candidates

NS could just bring in an investment company to buy the other half of PAS, take over operations themselves, keeps it unconsolidated & off the books. CSX buys everything else, accepts whatever STB requires them to do, then parcels out whatever they don't want to friendly class-IIIs.

I was thinking that too. There is also precedent for it happening. In 1990, the Chicago, Missouri & Western (created when the ICG sold the old Chicago & Alton) was liquadated. Southern Pacific picked up the east end from East St. Louis to Chicago. The Santa Fe wanted to buy the line from Kansas City to East St. Louis, but couldn't afford to because it would hurt their balence sheet (the ATSF had a lot of debt). They soon signed an agreement with Wertheim, an investment firm, where they would buy the west end of the CM&W. The Santa Fe would get haulage rights over the new railroad, which was called the Gateway Western.

When ATSF and BN merged, the GW was of no use to ATSF anymore. It ended up being sold to KCS.

The investment co thing works if you can find investors willing to pay the buyout price. I’m assuming that ns could afford it but has, for whatever other reason, chosen so far not to buy out the other half. If you were an investor and the party with the most interest in the property won’t pay the price, wouldn’t that make you a little suspicious that it may not be a great investment?

NS probably has strong contractual terms related to its 50% share of PAS that protects its access to utilize the asset. NS does not need to buy the other half to receive the same access benefits. Sure, NS may need to split revenues on the last 150 or so miles of a 750 mile [for example] shipment, but that is for instance only 10% of the revenues from the shipment assigned to PAS and, after expenses, probably much less than 10% of the profit. They may even be able to assign more costs to the last leg of the trip on PAS, recording a loss. If that's the case, the PAS stake may have very little value to any buyer. Would anyone want to buy that 50% stake and battle NS in court for years?

In short, while NS owns 50% of PAS, I expect that they effectively get 100% of the benefits after PAS sells.

F74265A wrote: ↑Tue Nov 17, 2020 10:09 pm Who would want the other 1/2 of pas if not NS? Cp or GW would fit as logical, connecting candidates

If you look at the 2020 CP system map, it shows they already have "trackage, haulage and commercial rights" to Ayer. Although they would seem to be a logical buyer of that half of PAS, why would they spend the money if they already have access? I'm guessing they don't have to. And unless someone knows otherwise, I don't think they even use the rights. Anyone know?

Cp is a logical candidate bc contiguous and they are in growth mode. Whether there’s a business case for them tacking on .5 of pas is a harder question and I don’t know

They only have haulage rights and no they are not exercised. They were last used with IM trains 268/269 (I think those were the symbols - usually a single CP SD40) to Ayer prior to the GRS joint effort with NS on MOAY/AYMO.

So I guess the next question would be,if CSX and NS work out a deal,say a third party gets the other half of PAS,and CSX everything east of Ayer,how well could this go with the STB?

Regardless of what happens a transaction of this size, with this many interchange partners, public agencies, etc is not going to get through the board quickly.

CP has haulage rights in other commodity groups such as grain and autos. They’ve had some spot moved the last few years if both to Ayer. Not sure if the ethanol moves were haulage or not either but it seems CP is able to quote through rates there too on a couple of routings (we know they can quote via the VRS-NECR-PW routing too but haven’t seen that is many years). I think those moves depend on if the supplier is online with CP or not, as I imagine an all CP routing with haulage is better than a broken up routing via CSX.

Some new business for the new owners:

http://blog.mass.gov/transportation/mas ... ap-grants/