CSX Acquisition of Pan Am Railways

I’m going to disagree that any NS buyout right would be at a price set by seller. These are 2 highly sophisticated parties and that’s arguably an unreasonable term. More likely the buyout price, if the agreement included a buyout, would be set by a formula based on business metrics and that formula would have been heavily negotiated and included in the original pas deal . Moreover, the deal would have specified exactly when the buyout right could be exercised.

F74265A, you may well be right, though based on my experience with such agreements (admittedly, mostly in the realm of investment partnerships in commercial office buildings), "fair market value" would be the price to go by - which sort of precludes anything formulaic. Whatever the case may be, I have a feeling that we haven't heard the last of NS and buying the balance of PAS. I think they may just be playing the game on a bit longer scale than may be apparent at the moment.

Separately: I do most of my railfanning (on the very rare occasions when I am able to find the time) at Shenandoah Jct., not so far from your stomping grounds. I'd look forward to running into you there at some point - you are clearly very knowledgeable about railroads in New England.

Quite simply this is a shrewd business move by the CSX. They probably know the STB will require some competition. They know NS has played the "long game" in Eastern NY and New England. PAS in 2009, then the D&H South end purchase almost 10 years later, which laid the groundwork for the final acquisition of PAS by connecting the dots. But NS is clearly not ready to make the purchase, figuring it would be there when they were in 5-10 years. CSX has forced NS's hand because they are in a stronger position than NS. After spending the last several years "downsizing" CSX is ready to expand again. It's not everyday a regional the size of Pan Am comes up for sale with a solid traffic level, and it's not like there is much in the way of new railroad construction to drive significant traffic increases.

mrj1981 wrote: ↑Sun Dec 06, 2020 9:06 pm Separately: I do most of my railfanning (on the very rare occasions when I am able to find the time) at Shenandoah Jct., not so far from your stomping grounds. I'd look forward to running into you there at some point - you are clearly very knowledgeable about railroads in New England.

Yes, am not too far away in suburban DC
Will try to figure out the private message thing

I wonder if CSX will sell off a few branches like the Highland branch in Connecticut? I wonder if they do, I wonder if G&W would buy it. I'd love to see CNEZ buy the highland branch, since I think AJ would promote business on the line, especially the line south of Waterbury...

CSOR, a g&w outfit already, I believe, leases a bunch of CT property from csx
So I’d say yes, likely

What will happen to the PAS lines in Connecticut? I doubt CSX would want the Canal line (to service a propane dealer) or Plainville...

NS may have had the right long term strategy but fear of capital gains taxes rising sharply may have triggered Fink to want to book a sale this year. Foote seems to be making excellent progress revitalizing CSX and competing for traffic. One thing to consider is that PSR has substantially lowered the costs of shipping, so now railroads can compete more effectively with trucks, particularly for heavy freight carload traffic. Its hard to imagine railroads as a growth industry but that may be about to happen, excluding coal.

ccutler wrote: ↑Mon Dec 07, 2020 6:46 am NS may have had the right long term strategy but fear of capital gains taxes rising sharply may have triggered Fink to want to book a sale this year.

Mr. Cutler in the more than forty four years that I have been recognized as a CPA, I cannot think where any enacted tax legislation raising tax liability on any person, living or fictitious, has been made effective retroactively. Therefore should taxes be raised, any such provisions doing so will be accompanied by the "Codese" of "Effective with Tax Years beginning after 2021.....".

In short, Pan Am and CSX have at least a full year in which to close the transaction.

newpylong wrote: ↑Tue Nov 17, 2020 9:18 pm Keolis removed a pipe from a bridge at Sullivan Square.

Anyone else scratching their head and thinking about the fact that there apparently was only one minor impediment that prevented access to the Produce Market all these years? Pan Am got this business from CSX about 10 years ago. When it became apparent that unless F Plate reefers where cleared into Everett the business would be permanently lost, you would think someone at Pan Am would have said, "you know that one pipe could be removed". Hopefully CSX will make a little more effort in figuring out how to better serve its new customer base.

P.S. I did once see a boxcar setout on the Grand Junction that had hit the bridge at Memorial Drive so going that way is not possible as mentioned elsewhere.

P.P.S. I found a couple of images of railcars at the Produce Market and they were stacked floor to ceiling with boxes of potatoes. While other pictures showed pallets of produce being quickly and easily off-loaded from truck trailers, it would seem that the railcars had to be unloaded completely by hand box by box. Doesn't seem like a very efficient process.

All of this is already being discussed in the Pan Am forum. Please continue the discussion there.

CSXT didn't turn the Produce business over to PAR until 2018.

Something as simple as removing a pipe is easier said than done when you're dealing with multiple railroads, and the state owned road overhead. Also, until recently there were plenty of ARMN reefers in service so that was not an impediment to service. Now, they are becoming scarce and long in the tooth so Plate F is a must.

Is it possible the STB could put conditions on CSX as opposed to requiring them to sell their 50% stake altogether? Maybe they’ll have to give up the operational side of things and the two sides would have to agree on a new operator if NS doesn’t want to operate it - maybe someone like GW?

Even if they do have to spin off that 50% entirely I could see NS not wanting it and instead wanting to recruit someone else - like possibly GW again - to take it as well as take over the operations from ST. Even if NS did acquire the full territory I could see them selling some of the business on the territory and possibly even still paying someone else to operate it. Obviously NS wants to make sure 22K/23K and 16R/11R and the related business is protected - but does anyone think they actually would want any of the rest of it?

I will say though that it would be something to have CSX crews operating 22K/23K and 11R/16R if STB didn’t require any major changes.

newpylong wrote: ↑Mon Dec 07, 2020 12:49 pm CSXT didn't turn the Produce business over to PAR until 2018.

Something as simple as removing a pipe is easier said than done when you're dealing with multiple railroads, and the state owned road overhead. Also, until recently there were plenty of ARMN reefers in service so that was not an impediment to service. Now, they are becoming scarce and long in the tooth so Plate F is a must.

CSX couldn't clear the Grand Jct., the Storrow Drive-Grand Jct.-BU Bridge sandwich couldn't be fixed. When CSX turned the switching over to PAR the hope was to quickly get plate F....but the GLX screwed up the clearances through Mystic Jct for over a year. When that work was finished, PAR was able to get the pipe moved and a Plate F clearance route into Everett/Chelsea. Now with Railex gone there is increased pressure for a rail option direct into the terminal.