UNION SUPPORTS RIO GRANDE-SP MERGER PROPOSAL

UNION SUPPORTS RIO GRANDE-SP MERGER PROPOSAL

The United Transportation Union issued a ringing endorsement of Rio Grande Industries Inc.'s proposal to buy the Southern Pacific Transportation Co.

In a letter to the Interstate Commerce Commission, UTU President Fred A. Hardin said the Rio Grande's Denver & Rio Grande Western Railroad is one of the best operated railroads in our great country and the employer-employee relationship is one to be proud of.The ICC is currently weighing Rio Grande's $1.8 billion offer to the Santa Fe Southern Pacific Corp. for the Southern Pacific; the new company would be the nation's fifth-largest railroad, with some 15,500 miles of track and 28,000 employees.

The thousands of SP employees wholeheartedly endorse a merger of D&RGW-SP knowing that an end-to-end merger, such as that, will insure jobs and increase competitive rail service to the thousands of shippers in the states served by those two railroads, Mr. Hardin said.

He told the commissioners he understands that they are being bombarded by the greedy objectors (or better described 'vultures') who do not want to see strong, competitive railroad service, but instead want the quick easy profit of a liquidation or spin-off . . . .

Mr. Hardin said the greedy objectors he was referring to are Kansas City Southern Industries, which owns the like-named railroad, and the Union Pacific Railroad.

Mr. Hardin said the Union Pacific needs no more help, because it is already a very successful carrier. He said the railroad also will be a bigger winner in Canada's recent decision to deregulate its rail industry, which will open new opportunities to both the UP and the Burlington Northern.

The UP has indicated it will seek unspecified concessions from the ICC as part of the Rio Grande-SP proposal.

Mr. Hardin said that if KCS had been allowed to buy the SP - it had been the leading contender for the SP at one point - there would have been a lot of overlap between the carriers, which would have led to abandonments and layoffs in the South and Southwest.

In his letter to the commissioners, Mr. Hardin said, It has been very difficult since 1980 to find reason to congratulate the ICC on any of its actions or decisions. However, you are due congratulations in two instances, the commission's rejection of the SFSP's attempt to merge the SP with the Atchison, Topeka & Santa Fe Railway, and its ordering SFSP to divest one of the roads.

Earlier, the Railway Labor Executives' Association had issued its conditional support of Rio Grande's bid, contingent upon its following through on its promises to labor.

The ICC is looking over the Rio Grande's proposal on an expedited schedule that is designed to allow a final vote this summer.

The sale grows out of an attempt to merge the SP and the Santa Fe that began in 1983. The SP was put under the control of a trustee, pending a final ICC decision.

The commission rejected the proposal in 1986, saying it would be anti- competitive. The ruling shocked the industry, since the ICC had been approving nearly all merger petitions up until then.

The SFSP asked the ICC to reconsider its decision; in 1987 the commission refused to do so and it ordered the holding company to sell at least one of the lines.

A bidding war ensued, and the Rio Grande emerged as the victor.