CSX Acquisition of Pan Am Railways

If G&W is balking at executing the PAS ops takeover, then what?

1. Sweeten the deal for G&W somehow
2. Let G&W walk - will STB have anything to say or do about its abrogating the ops agreement?
3. If no G&W as PAS operator, then what?
a.) CSX continues to operate 100% of PAS with its 50% ownership in perpetuity (ie, today's situation)?
b.) NS finally steps up to take 100% ownership of PAS?
c.) CP buys out CSX's 50% share of PAS?
d.) Another short line organization buys out CSX's 50% share (eg, Watco, FGLK, R&N, etc)
e.) Something else?

Do we have any idea what is giving G&W/B&E agita? I'm guessing its the labor agreement negotiation related.

G&W isn't balking, this is hung up simply because of a unique union situation (i.e. splitting the roster into two companies with different agreements). The pace is picking up again and this may be resolved sooner rather than later.

Thanks for that insight, NYC27.

On a somewhat related note, here's a CSX press release from 2 weeks back with some Pan Am content:

Angie Williams Receives Railway Age 'Women in Rail' Recognition

Excerpts related to Pan Am:

November 4, 2022 - CSX’s Angie Williams has been named to the 2022 Railway Age Women in Rail honor roll for her contributions to modernizing financial-related systems, having a key role in CSX’s integration of Pan Am Railways and Quality Carriers, as well as leading the accounting on the recent sale of property and property rights in three states worth $1.2 billion-plus.

As vice president and chief accounting officer at CSX, Angie has been integral to the company-wide integration of both Pan Am railways in 2022 and Quality Carriers in 2021. She directed a cross-functional team that worked through the employee transition of former Pan Am employees to CSX systems, ensuring uninterrupted benefits, reporting and pay, sales and marketing, operations integration. She has also had a key role leading the technology integration, preparing Pan Am systems for the January 2023 system cutover, and she was equally essential to the successful integration of Quality Carriers with CSX.

https://www.csx.com/index.cfm/about-us/ ... cognition/

Far from an easy task...

Very cool that CSX valued Pan Am at 1.2 billion. Numbers I saw floating around were that they bought for 700 million and I thought that was high. But if they value it at 1.2 billion it's easy to see why they said yes!

It's probably worth $1.2B after they invest $500M in upgrades! The real question is, is this purchase "accretive to earnings". And with a large railroad they can probably manipulate the accounting on this relatively small?? piece to tell whatever story they want.

From the CSX quarterly report:

Acquisition of Pan Am Systems, Inc.: On June 1, 2022, CSX completed its acquisition of Pan Am Systems, Inc. (“Pan Am”) which is the parent company of Pan Am Railways, Inc. who jointly owns Pan Am Southern, LLC with a subsidiary of Norfolk Southern Corporation. The closing price of $601 million was funded through a combination of stock valued at $422 million and cash totaling $179 million, subject to certain customary purchase price adjustments. Total cash consideration includes a $30 million deposit paid in fourth quarter 2020. The results of Pan Am's operations and its cash flows were consolidated prospectively beginning June 1, 2022, and are included in the information presented herein unless otherwise noted.

So they actually only paid $179M. But they didn't use the word accretive, lol. As for contracts with PAS, probably the same folks working on that were working on the national agreements which were more important.

A little bird flew in the window this morning and informed me that a NS rail train is enroute to New York State to begin dropping rail along the old Albany Main, Delanson to VO, next week. This is second-hand info, so if anyone more connected wants to dig into it, could be cool news.... maybe with NS stating that they want to get their act together again, they will expedite getting IM running over the B&A...

Very interesting if true
The other work to watch for is the bridge clearance in Clinton
No DS to Ayer via the B&A until that’s fixed. I don’t know if undercutting can cure the issue or if the bridge must be raised again

It is reported with photos on the CSX Northern New England & G&W/B&E Railfans Facebook page that CSX CEO Joe Hinrichs and Executive Vice President of Operations Jamie Boychuk were in Waterville on Friday 12/9/22. Pictures actually were posted on Hinrichs' LinkedIn page.

Today I heard via scanner comms a crew member expressing surprise that locomotives had microwave ovens installed in them. Attached video at 1:13 explains.


https://youtu.be/rPJiu7vur1o?t=73

NS fully loaded CWR train 936 led by 4499 passed through Greencastle/Harrisburg/Sunbury on New Years Eve on its way north to the D&H around Schenectady apparently. Might be the long awaited rail for staging the Albany Main rehab to Voorheesville or it might be something else.

That train is leaving DJ now down the old AM, to drop rail. I just got the IAR (I am responding app for firefighters) notification that multiple grade crossings will be blocked by the rail train. Hogger with SMS states two more rail trains to follow.

That’s very good to hear! Thanks.

A video from CSX of CEO Joe Hinrichs' visit to the Waterville shops after the takeover.
https://www.youtube.com/watch?v=UBXWv965Tjo