(The following story by John Henry appeared at Arkansasbusiness.com on January 5.)
LITTLE ROCK, Ark. — Georgia-Pacific Corp. and Genesee & Wyoming Inc. have signed an agreement for GWI to acquire three short-line railroads, including two in Arkansas, from Georgia-Pacific for $55.6 million.
As part of the deal, GWI has entered into a 20-year agreement to provide rail transportation service to Georgia-Pacific plants served by these railroad operations.
GWI is buying the Arkansas Louisiana & Mississippi Railroad Co., the Fordyce & Princeton Railroad Co. and the Chattahoochee Industrial Railroad. For the 12 months ended Sept. 30, these railroads reported a combined $18 million in revenue, of which Georgia-Pacific accounted for approximately 90 percent.
Based in Crossett, the ALM and F&P have 109 miles of contiguous track between Monroe, La., and Fordyce, and interconnect with Union Pacific and Kansas City Southern. In Fordyce, the railroads serve one plywood plant and one oriented strand board plant for Georgia-Pacific. In Crossett, the railroads serve a plywood plant; a lumber mill; a paper mill complex producing tissue, paperboard and fine papers; and a chemical facility. At Crossett, the softwood plywood plant is the largest in the world while the paper mill is one of Georgia-Pacific?s largest producers of tissue and other paper.
In 2002, the ALM and F&P hauled 22,470 carloads, including forest products (67 percent), pulp and paper (14 percent) and chemicals (18 percent).
Based in Cedar Springs, Ga., CIRR operates more than 15 miles of track between Hilton and Saffold, Ga., and interconnects with CSX Corp. and Norfolk Southern. CIRR serves Georgia-Pacific?s Cedar Springs containerboard mill.
The CIRR, ALM and F&P will be managed by James W. Benz, president of GWI?s Rail Link subsidiary in Jacksonville, Fla.
GWI operates more than 8,000 miles of owned and leased track and has an additional 3,000 miles under track access arrangements.
“Consistent with our ongoing rationalization of nonstrategic assets, this transaction is an excellent opportunity to sell assets that are more valuable to another company and use the proceeds to repay debt,” said A.D. “Pete” Correll, Georgia-Pacific chairman and CEO.
The acquisition was expected to be completed by Dec. 31.