CSX Acquisition of Pan Am Railways

[ccutler]

Pan Am realized much of its value when it sold key access routes to terminals to the PAS JV with NS. The merchandise traffic of about 100 loads a day has value too, but you can guesstimate that value as well. Is that $400 per carload? $1000? Let's say it's the latter, for $36.5 million in gross revenue per year, with a 60% operating ratio [which I don't believe to be the case]. Then Pan Am has EBITDA [earnings before interest, taxes, depreciation, and amortization] of $14MM per year. If you love railroads and you'll pay 20 times EBITDA, your purchase price would be $280 million, minus debt outstanding, for the merchandise carload traffic.

You can play with the variables based on your better-informed understanding of their carload traffic, operating profit margins, revenues per carload, and debt load, to determine a value for the carload business.

You should also remember that PanAm also owns 40% of the PAS business. Its not clear what that is worth, but based on NS's original investment, I would guess $100 million to NS, and maybe not much to another suitor. Since NS has traffic rights and benefits from a long haul, the PAS segment is much more valuable to them than it would be to a Pan Am purchaser.

That being said, I would not be surprised to see large infrastructure funds overspend for assets like Pan Am.

[gokeefe]

That being said, I would not be surprised to see large infrastructure funds overspend for assets like Pan Am.

That would be the Fortress Investment Group scenario ...



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[bostontrainguy]

How about something totally different? The first major "Open Access" railroad in America? From TRANSITMATTERS:

One ambitious framework for bringing this infrastructure under public ownership would be for the New England states to collaborate on buying the entire Pan Am system.
. . .
In Europe, many such mainlines operate as “open-access” infrastructure, with operators paying to use it as they go.

https://commonwealthmagazine.org/opinio ... ways-sale/

[newpylong]

You should also remember that PanAm also owns 40% of the PAS business.

PAS is split 50/50 PAR and NS.

[Gilbert B Norman]

Learn things everyday, Mr. Newpy, that NS already has "skin in the game" with its equity investment in the PAS.

My problem: I just don't think of a line that is often only 5miles South of NH and VT as South, but then, considering the MEC, and even the Springfield-Windsor line. I guess it is.

To me, Springfield is South in MA.

[bostontrainguy]

PAN AM + Norfolk SOUTHERN = "PAN AM SOUTHERN". Not a geographical name.

[NS VIA FAN]

Now would JD Irving allow them to have free access to the Port (sounds like Irving kind of "owns" St. John)

Irving kinda "owns" New Brunswick!

(BTW.....how far south is the reach of Irving Gas? They have northern New England pretty well covered. Any Gas Stations in Mass, RI or Connecticut?)

And for those not familiar with Eastern Canada:

The spelling is always SAINT JOHN New Brunswick to avoid confusion with ST. JOHN'S Newfoundland & Labrador. (New Brunswickers get a bit touchy about that!)

In the Halifax Airport you have to be very careful listening to the departure announcements. You could have a couple of flights boarding simultaneously to St. John's YYT on Air Canada, WestJet or Porter.....and at an adjacent gate....a flight to Saint John YSJ! They usually also say Newfoundland or New Brunswick in the announcement.....but some only hear "St. John's" or "Saint John" and don't even distinguish which province they are going to!

[gokeefe]

How about something totally different? The first major "Open Access" railroad in America?

I doubt this proposal would have much support in Maine. The success of the Downeaster is strongly correlated to the public private partnership with Pan Am and the continued private ownership and operation of the railroad infrastructure.

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[MEC407]

(BTW.....how far south is the reach of Irving Gas? They have northern New England pretty well covered. Any Gas Stations in Mass, RI or Connecticut?)

From their web site:

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Screen Shot 2020-08-09 at 16.22.34.png (286.59 KiB) Viewed 1723 times

Screen Shot 2020-08-09 at 16.27.04.png (125.02 KiB) Viewed 1721 times

[Gilbert B Norman]

PAN AM + Norfork SOUTHERN = "PAN AM SOUTHERN". Not a geographical name.

Mr. Trainguy, even as a 79yo, I continue to learn. PAS now makes sense to me.

I have now concluded, such comprises the former Boston & Maine's E-W line through Ayer. (to Boston now MBTA), Fitchburg, Greenfield, Hoosac Tunnel, M'ville, and was once the route of the "Flying Yankee"

Do I get a 100 for that, teach?

[bostontrainguy]

Well "NORFOLK AM" didn't make much sense

[newpylong]

PAN AM + Norfork SOUTHERN = "PAN AM SOUTHERN". Not a geographical name.

Mr. Trainguy, even as a 79yo, I continue to learn. PAS now makes sense to me.

I have now concluded, such comprises the former Boston & Maine's E-W line through Ayer. (to Boston now MBTA), Fitchburg, Greenfield, Hoosac Tunnel, M'ville, and was once the route of the "Flying Yankee"

Do I get a 100 for that, teach?

A+.

This map might be helpful: https://external-preview.redd.it/g8FiCe ... b2fe819c6a

[gokeefe]

I have now concluded, such comprises the former Boston & Maine's E-W line through Ayer. (to Boston now MBTA), Fitchburg, Greenfield, Hoosac Tunnel, M'ville, and was once the route of the "Flying Yankee"

With only one exception Mr. Norman ... The "Flying Yankee" trainset was "The Minuteman" when it operated between Boston and Troy. The "Flying Yankee" route was always Boston - Portland - Bangor. Still A+.



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[bsweep]

Now would JD Irving allow them to have free access to the Port (sounds like Irving kind of "owns" St. John) and would their Maine Short Lines expect some "disproportionate" division of a rate - especially appertaining high value traffic.

I could be mistaken, but I seem to recall that the NBSR has always operated as a terminal railroad for Guilford/Pan Am as well as BAR, MMA, CMQ and now CP. They get a flat handling rate per car delivered and the rates are set by Pan Am and CP. For that reason, I always thought NS might well want to get access to Saint John as part of any deal where they purchase the entire kit and kaboodle. However, the amount of capital involved to bring the line up to any standard where they could compete would be massive.

[gokeefe]

Saint John definitely has more potential as a port than Boston. On the other hand so does Portland. Could be an interesting option to NS. I'm assuming for the most part these small ports are meaningless.

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