(The following report appeared at LatinTrade.com on November 4.)
United States-based RailAmerica expects to complete the sale of its 55% stake in Chilean rail operator Ferronor by year-end, company chairman, president and CEO Gary Marino said during the company’s third quarter conference call Thursday.
“Discussions continue with several buyers,” said Marino.
Company senior VP and CFO Michael Howe said that a stronger peso impacted RailAmerica’s 3Q03 bottom line for operations in Chile, which closed at a US$100,000 net loss versus a US$600,000 net profit in 3Q02.
He added that new transportation contracts with Chile’s state copper corporation Codelco and natural gas supplier Norgas helped increase operating revenue in the quarter there 24% to US$6.7mn.
In January, RailAmerica announced it had signed an engagement letter with investment banking group Credit Lyonnais Securities (USA) Inc. to complete the sale, proceeds from which will be used to pay off long-term debt.
Ferronor’s assets include the 2,200km Ferronor and the 89km Potrerillos railroads. Ferronor operates in northern Chile from La Calera to Iquique, and is the only operating line crossing the Andes mountains into Argentina.
The Potrerillos line operates from the town of Potrerillos to a connection with Ferronor at Diego de Almagro, with continuing service for 159km on Ferronor to Barquitos port.
RailAmerica purchased its stake in Ferronor from the Chilean government in February 1997, with Potrerillos beginning operations in January 2002 under an exclusive 15-year lease agreement with Codelco. Rail infrastructure includes 38 locomotives and 544 railcars.
Company-wide, net income for the quarter was US$4.2mn, down 28.8% from 3Q02, which RailAmerica attributes to the effects of the Australian drought. The company announced plans to sell its Australian railroad, Freight Australia.