gokeefe wrote:Either that or Trains Magazine blew it ... The more I'm reading about this the more I think CSX may have actually been considering selling the B&A.
Trains blew it on 'what' exactly they'd consider selling. Something B&A-related may be hot to transact, but Class I territorial realignment isn't it.
They're never going to sell out the intermodal franchise in New England. It's a huge moneymaker with monster yearly growth now being fully realized, gives them regional supremacy and primary influence over every other carrier east of the Hudson and south of the St. Lawrence Seaway, costs them very little to run as a single linear poke out of giant Selkirk hub, and has its entire bucket list of franchise-supporting upgrades bought and paid for. And it not only realizes enormous value for them, but there's no other operator--not even NS--who can run the B&A at those profit margins because no one else has a hub as superior as Selkirk to attach it to. That last point is the key one for whatever pump-and-dump scheme EHH was running for a fickle Wall St.: if no other carrier possesses the hub that makes the B&A anywhere close to what it's worth when attached to CSX-Selkirk, then CSX can only sell off the Boston Div. franchise for less value than what it's truly worth.
The market will immediately punish them for the pointlessness of a move like that, and that runs contrary to every instant-gratification investor logic ascribed to EHH & lackeys' motives. That particular property dispersal rumor made just as little sense in market-speak as it did for railroading, so it's zero surprise CSX shot it down immediately. Even if stock-goosing is their one and only goal in life, they would've shot the report down just as quickly and emphatically.
Now...selling the property out from under their feet to MassDOT while retaining the full freight franchise on trackage rights is a very different set of circumstances. Much, much more realistic scenario with much more smoke pointing to possible imminent fire. MassDOT wants WOR-SPG badly now that the late stages of the NNEIRI study has pegged a firm valuation on Inland/Springfield-hub passenger service. CSX now has all the freight upgrades paid for that it ever needs to support that intermodal franchise, and the NNEIRI study's Recommended Alternatives check off every above-and-beyond upgrade they'd ever need to ensure protection for their traffic priority in a peaceful dispatch coexistence with passenger traffic. Right now--while the IM upgrades are fresh, but before the decision is made on proceed on the NNEIRI build--is when the B&A's value is at its peak for a cash-out to trackage rights. And they can probably force MassDOT to swallow the lower-value SPG-to-state line half of the corridor and 30-mile Fitchburg Secondary branchline property in the package to wring max value out of those assets.
The only things left on their tax rolls after that are: the mission-critical yards directly serving the IM franchise (lump Framingham in there as it performs critical classification tasks for Worcester + the interchanges); the 8-mile Milford Branch (already subject to a fixed state purchase price from a 30-year-old Conrail-MassDOT agreement, to be picked up when that territory's outsourced to Grafton & Upton); and 3 or 4 worthless-rump industrial tracks of about a mile each. They've already pared down the Eastern MA locals out of Framingham to about as low-fat a minimum as it gets. There's maybe 2 more dailies (Attleboro-Braintree to Mass Coastal and Framingham-Everett to Pan Am-via-Worcester haulage) left to scrape, 1 weekly (Walpole-Milford, to G&U), and maybe 2 small customer buyouts (Stoughton Line + final 6 miles of Fitchburg Secondary requiring an overnight outlaw the couple days they run further north than Clinton/Sterling) until they literally can do no better. It's just the interchanges (G&U, MC, Fore River, Bay Colony), a couple high-margin Greater Boston anchor customers tethered at/near Walpole & Readville yards, and flotsam that has zero available outsource candidates and doesn't quite suck enough to completely tank (Fitchburg Sec. to Clinton/Sterling, middle-NEC, last of the industrial tracks).
Public sale fully makes sense for goosing the stock, because the timing for a sell-high flip to trackage rights is right now. And all signs point to MassDOT's interest hitting near-peak when it comes to digging deep to make the buy. They probably want to get while the getting's still good for public-private dealing, as the fed tax cuts will take a hatchet in future fiscal years to the state transpo piggybank and the atmosphere for making proactive moves is going to be chilled considerably if/when any much-ballyhooed fed infrastructure bill dies before an impotent Congress. The two sides have had a productive negotiating relationship dating back over 10 years, so probably have extensively discussed probable purchase prices for that package. So while getting snagged on a negotiating impasse is still a hazard for this type of heavy wheeling and dealing, conditions right now in 2018 are mutually the ripest they've ever been.
Might still be premature to place betting odds. For one, the Draft MA State Rail Plan still has one more revision to go this Spring before it goes final and last-minute wording changes can signal either an amping-up or dialing-back of the state's intent. But all big-biz and public policy logic points to a current atmosphere ripe for active discussions getting hotter/heavier than they've ever been before.
