FTAI Infrastructure has agreed to acquire The Wheeling Corporation, which owns the Wheeling & Lake Erie Railway Company (W&LE), for $1.05bn in cash.
The Wheeling Corporation is being bought from an entity controlled by Larry Parsons, who is the CEO of The Wheeling Corporation.
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The W&LE operates as a Class II regional freight railroad, serving over 250 customers along more than 1,000 miles of track in Ohio, Pennsylvania, West Virginia, and Maryland.
It connects to Transtar’s Union Railroad outside of Pittsburgh, Pennsylvania.
Concurrently with the finalisation of the acquisition, FTAI intends to refinance its existing 10.50% senior notes and Series A preferred stock.
FTAI has secured commitments for $2.25bn in total capital, which includes $1.25bn in new debt and $1bn in preferred stock to be bought by Ares Management funds and issued through a newly established holding company that will own the merged Transtar and W&LE operations.
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By GlobalDataFTAI CEO Ken Nicholson said: “Growing our freight rail platform has been a key focus for FTAI, and we are thrilled to have this opportunity to combine with the W&LE.
“We believe the W&LE is an excellent candidate for a combination with Transtar, adding scale, diversification and network reach.
“Together, Transtar and the W&LE have identified several growth opportunities and operating efficiencies that we expect to drive substantial growth in revenue and EBITDA.”
The transaction is anticipated to close into a voting trust according to the rules set by the US Surface Transportation Board, in the third quarter of this year, pending the fulfilment of standard closing conditions.
FTAI expects to assume control of the W&LE once STB approval is granted, making W&LE an affiliate of Transtar.
Barclays and Deutsche Bank offered debt commitments and financial advisory services to FIP, while Sidley Austin and Skadden, Arps, Slate, Meagher & Flom served as legal advisors to the company.
Calfee, Halter & Griswold and Fletcher & Sippel provided legal counsel to W&LE.
