(Reuters circulated the following story by Dilipp S. Nag on June 25.)
NEW YORK — Railroad operator Genesee & Wyoming Inc. said it started liquidating its Mexican operations as the business was not financially viable without the reconstruction of hurricane-damaged Chiapas rail line.
The company’s unit expects to wind down operations and discontinue rail service over the next four weeks, apart from ending a 30-year concession from the Mexican government.
The Greenwich, Connecticut-based company expects charges of about $12 million, or 30 cents a share, in 2007, majority of which will be recorded in the second quarter.
“The uncertainty of the Chiapas reconstruction combined with the deterioration of our rail traffic means that we can no longer justify absorbing financial losses or making incremental investments,” Chief Executive John Hellmann said in a statement.
Genesee expects to complete the formal liquidation of the unit, which had $17.5 million of assets as of March 31, by year-end 2007. The Ferrocarriles Chiapas-Mayab, S.A. de C.V. unit currently has 407 employees.