PITTSBURGH — The Iowa, Chicago & Eastern Railroad Corporation (“IC&E”), a wholly-owned subsidiary of Cedar American Rail Holdings, Inc. which is, in turn, a wholly-owned subsidiary of the Dakota, Minnesota & Eastern Railroad Corporation (“DM&E”), announced the acquisition of the 1,400 mile regional railroad formerly owned by the I&M Rail Link, LLC (“IMRL”) with operations having begun at 12:01 a.m. CST, Tuesday, July 30.
Cedar American President and Chief Executive Officer, Kevin V. Schieffer said, “We are all excited about having accomplished the acquisition and the opportunities and challenges it brings, both for IC&E and DM&E.” Schieffer said that within the coming months, Cedar American will undertake additional regulatory proceedings to complete the integration of IC&E and DM&E into a rail system managed under common control, begin marketing of new competitive route options for existing shippers, undertake to expand connections with other railroads, solicit new customers and address dozens of employee and organizational issues. “When these two railroads are combined under common control, the resulting rail system will be roughly triple the size of the current DM&E system,” added Mr. Schieffer.
The financing of this acquisition included a Series D Preferred Stock offering, in which the L. B. Foster Company (Nasdaq: FSTR) participated by investing an additional $500,000. The Company estimates that after this transaction, its fully-diluted ownership percentage in the DM&E is approximately 13.6%.
“We are excited by the potential for value creation inherent in this transaction,” stated Lee B. Foster, Chairman of L. B. Foster Company. “There are tremendous synergies to be realized in addition to the enhancement of the franchise which underlies the Powder River Basin project,” he added.
L. B. Foster Company, headquartered in Pittsburgh, PA is a manufacturer, fabricator and distributor of rail, construction, and tubular products.