Caterpillar To Acquire Progress Rail

[GEVO]

From last week, thought this may be of interest.

Press Release

[D.Carleton]

How 'bout some background? Progress Rail was a component of Electric Fuels which itself was a subsidiary of Florida Progress, parent of Florida Power Corporation. In March 2005 Florida Progress' successor, Progress Energy, sold Progress Rail to a financial firm for $405 million. Last week Scaterpillar bought Progress Rail from that firm for $800 million and assumption of $200 million of debt. What does Caterpillar know that Progress Energy does not?

[mxdata]

D, That is a great question, maybe one of these years somebody from Caterpillar will provide some insight into their corporate strategy in the railroad industry over the last fifteen years. It seems like they gear up for railroad work and hire people, then when the industry has a downturn they lose interest in it and chop the railroad staff back to almost nothing again. My address book program has a very long section of folks who used to work for Caterpillar in railroad sales and service over the years and are not there any more. I think Caterpillar understands that the railroad industry is one of the big market segments, but I don't see a long term strategy emerging yet for their role in it. It would greatly help their standing with the railroads and the industry suppliers if they would get people with suitable industry backgrounds in the critical jobs and leave them there for long enough to get their feet on the ground. Of course the present "up" wave in railroad business has been going on for a year or two now, in another three or four years we will probably start the "down" cycle again. So it remains to be seen if CAT will cut back again when that happens.