Kansas City Southern bolstered its withered cash resources by completing a planned issue of $75 million worth of new common stock.
The smallest of the Class I North American railroads ended the second quarter with $62 million in cash or equivalents, down from $142 million three months earlier and $230 million at the end of December.
But besides battling the freight downturn that is facing all railroads, the company this year had been completing a high-cost rail line construction project south of Houston. That ended in June, reducing its capital spending along with the line-use fees it was paying in that area to run trains on tracks of Union Pacific Railroad.
The stock sale and lowered costs for second-half 2009 “should improve our liquidity,” said Chairman and CEO Michael Haverty. “Additionally, we don’t have any major debt maturities due until April 2011.”
When he reported a $6.7 million profit for the second quarter on July 30, after a $7.5 million first quarter loss, Haverty said with the stock sale and reduced spending pace after its big construction project “the company should have sufficient liquidity for the remainder of 2009.”
KCS sold 4.33 million shares, leaving it with about 96 million common shares outstanding. Haverty said KCS was able to issue the new equity “at prevailing market prices without affecting the market price of our stock and in conditions where many established companies are struggling to raise capital.”
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