(Reuters circulated the following article on September 30.)
SAN FRANCISCO — Short-line railroad operator RailAmerica Inc. on Thursday said it is exploring alternatives to dispose of its E&N Railway in British Columbia, Canada, and has arranged an amended $450 million senior credit line.
The Boca Raton, Florida-based company, which has 46 railroads in the U.S. and Canada, said it will take a pre-tax non-cash charge of $12 million to $13 million in the third quarter from its decision on the 181-mile E&N line, which it purchased from Canadian Pacific in 1999 for $11 million.
“The E&N Railway has been experiencing declining carloads over the past two years and is no longer viable,” Charles Swinburn, chief executive officer of RailAmerica, said in a statement.
RailAmerica is evaluating options for the E&N and expects “to dispose of it during the first half of 2005,” he said.
The company also said said it has entered into an amended and restated $450 million senior credit line and also repurchased $126 million of the $130 million outstanding principal amount of its 12-7/8 percent senior notes due Aug. 15, 2010, in a tender offer.
The credit facility consists of a seven-year $350 million term loan and a six-year $100 million revolving credit line.
UBS Securities LLC was sole lead arranger and bookrunner.
RailAmerica said it used proceeds from the sale of its Australian railroad, Freight Australia, and drawings from a $10 million credit line to repurchase the 12-7/8 percent senior notes.