(RailAmerica issued the following news release on January 26.)
BOCA RATON, Fla. — RailAmerica, Inc. today announced that it has completed its acquisition of the Bay City, Michigan-based Central Michigan Railway Company (CMGN) for $25.3 million. The transaction was funded by utilizing cash on hand supplemented by funds from the Company’s $100 million revolving credit facility.
The Central Michigan Railway operates 100 miles of rail line from Midland, Michigan, south to Durand, Michigan and generated revenues of approximately $11 million in 2003. CMGN provides rail freight service to the Saginaw, Michigan area, and interchanges traffic with Canadian National, CSXT, Lake State Railway, Tuscola & Saginaw Bay Railway, in addition to RailAmerica’s Huron & Eastern Railway (HESR) and Saginaw Valley Railway (SGVY). Major shippers on the CMGN include Dow Chemical and Consumers Energy. Commodities moved on the CMGN include chemicals, coal, agricultural commodities, sugar beets, fertilizer and cement. CMGN also has cross-dock, warehouse and transload facilities.
Gary O. Marino, Chairman, President & CEO of RailAmerica said, “The CMGN represents our sixth Michigan railroad, where we now operate over 500 miles of rail lines and move over 60,000 freight carloads a year. The Central Michigan Railway has a history of strong operational performance and free cash flow (free cash flow is defined as operating income plus depreciation less capital expenditures and debt service). Due to the fact that its operations fit so well with RailAmerica’s other Michigan railroads, we expect that we will derive significant cost savings and synergies from its integration into our organization. In fact, we anticipate that CMGN will be accretive to our earnings in 2004.”
RailAmerica, Inc. (NYSE:RRA) is the world’s largest short line and regional railroad operator with 49 railroads operating approximately 17,800 miles in the United States, Canada, Australia, Chile and Argentina, including track access arrangements. The Company is a member of the Russell 2000(R) Index. Its website may be found at http://www.railamerica.com.