RailAmerica Buys Three Alabama Short Lines

RailAmerica Buys Three Alabama Short Lines

Short line operator RailAmerica is buying the assets of three small freight railroads in Alabama for a total price of $12.7 million in cash.

The railroads are now owned by affiliates of Gulf and Ohio Railways. RailAmerica expects the purchase to close during the second quarter subject to regulatory approvals and other closing conditions.

The three short lines in the deal are Three Notch Railroad, Wiregrass Central Railroad and Conecuh Valley Railroad. Three Notch has 35 miles of track connecting Georgiana and Andalusia, Ala. Wiregrass Central operates on 20 miles between the towns of Waterford and Enterprise. Conecuh Valley is a 15-mile railroad linking Troy and Goshen.

Each interchanges with CSX Transportation, and has customers that mainly ship agricultural and manufactured products. They hauled a combined volume of about 6,000 carloads during 2010. For the next twelve months, RailAmerica expects them to generate roughly $3.7 million in revenue and $1.2 million in operating income.

RailAmerica President and CEO John Giles said these lines “have a solid customer base as well as a number of opportunities for further growth.” And because they are clustered near existing RailAmerica lines in Alabama, the transaction can “create significant operating efficiencies,” he said.

RailAmerica already owns and operates 40 small railroads with 7,300 miles of track in 27 states and three Canadian provinces. And Giles said, “We continue to have a strong balance sheet to take advantage of acquisitions that complement our core business.”

-- Contact John D. Boyd at jboyd@joc.com. Follow him on Twitter @jboydjoc.