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Eastern Railroad Discussion > Genesee & Wyoming to go private?


Date: 03/11/19 15:22
Genesee & Wyoming to go private?
Author: Lackawanna484

Bloomberg news reports that short line operator Genesee & Wyoming is in talks with Brookfield Asset Management to go private.  No word on whether this will actually happen. There are 120 railroads in the GWR network, and several countries would have to approve any decision to do the deed.

"Going private" means buying out other share owners and operating the company for a smalll group of interested investors, and, sometimes, employees.


Link to Bloomberg



Edited 1 time(s). Last edit at 03/11/19 15:29 by Lackawanna484.



Date: 03/11/19 15:41
Re: Genesee & Wyoming to go private?
Author: RayH

Explains the bump in the stock price today



Date: 03/11/19 17:21
Re: Genesee & Wyoming to go private?
Author: steamfan49

Well, I own shares in Brookfield, so I'm all for the buy-out, should it happen.  BAM is an excellent asset management company.

Ronnie McCallay
Amarillo, TX



Date: 03/11/19 17:25
Re: Genesee & Wyoming to go private?
Author: Bandito

Round and round it goes. Wasn't publicly traded Rail America bought out by the private equity investment firm Fortress? And then G&W bought Rail America. And now another private equity investment firm is to buy G&W?



Date: 03/11/19 17:44
Re: Genesee & Wyoming to go private?
Author: Lackawanna484

Bandito Wrote:
-------------------------------------------------------
> Round and round it goes. Wasn't publicly traded
> Rail America bought out by the private equity
> investment firm Fortress? And then G&W bought Rail
> America. And now another private equity investment
> firm is to buy G&W
?

That's the story, which hasn't been confirmed.

Railroads are capital intensive businesses, so they need acess to the capital (money) markets. 



Date: 03/11/19 20:07
Re: Genesee & Wyoming to go private?
Author: callum_out

That would have to be a private equity firm with a lot of money, 4.56B market cap, most likely looking
for some cash for a major CSX or NS line purchase.

Out



Edited 1 time(s). Last edit at 03/11/19 20:10 by callum_out.



Date: 03/12/19 11:08
Re: Genesee & Wyoming to go private?
Author: spwolfmtn

callum_out Wrote:
-------------------------------------------------------
> That would have to be a private equity firm with a
> lot of money, 4.56B market cap, most likely
> looking
> for some cash for a major CSX or NS line
> purchase.
>
> Out

That, or we'll have the "Toys'R Us" situation all over again by taking G&W private, but load it up with debt so it can't run effectively in the future.

We don't make much in this country any more, just try to make money by moving money around...



Edited 1 time(s). Last edit at 03/12/19 14:58 by spwolfmtn.



Date: 03/12/19 21:33
Re: Genesee & Wyoming to go private?
Author: TWC

spwolfmtn Wrote:
-------------------------------------------------------
> callum_out Wrote:
> --------------------------------------------------
> -----
> > That would have to be a private equity firm with
> a
> > lot of money, 4.56B market cap, most likely
> > looking
> > for some cash for a major CSX or NS line
> > purchase.
> >
> > Out
>
> That, or we'll have the "Toys'R Us" situation all
> over again by taking G&W private, but load it up
> with debt so it can't run effectively in the
> future.
>
> We don't make much in this country any more, just
> try to make money by moving money around...

G&W is already loaded with a considerable amount of debt. That's why they would want to find some financing before the class Is begin to sell off major lines.



Edited 1 time(s). Last edit at 03/12/19 21:34 by TWC.



Date: 03/13/19 06:06
Re: Genesee & Wyoming to go private?
Author: Lackawanna484

Some bond / debt offerings require the company to maintain various credit ratings, hold liquidity, etc.

If the company violates debt covenants, all kinds of (bad) stuff could happen.

Posted from Android



Date: 03/13/19 11:58
Re: Genesee & Wyoming to go private?
Author: Lackawanna484

rantoul Wrote:
-------------------------------------------------------
> Essentially this is the BNSF argument; as part of
> a holding company do not have to reveal metrics to
> Wall Street wolves.  I.E. to avoid the CSX and
> now UP syndrome.

Yes.

The level of detail that BNSF needs to reveal is much less than a company which is publicly traded.  But, the financials are out there, in public Berkshire filings. And, Berkshire issues its revenue, loading, expense, etc data for each line, with BNSF being described in detail.

BNSF also needs to maintain bond ratings for its various debt offerings, so that info has to be evaluated by Moody's, S&P, etc

The financials for BNSF begin on page K-40 of the 10-K filing, and duplicate what the railroad gives out in its regular releases.  What it doesn't share is the basis on which Mr Buffett decided to finance the railroad's wish list of capital expenditures.  BNSF earns money, and upstreams it to  BRK.  Some of that noney, all of that money, or even more money, taken from other subs, may be in the Christmas stocking.

Link to 2018 10-K



Date: 03/14/19 07:36
Re: Genesee & Wyoming to go private?
Author: ctillnc

Yes, BNSF must still file with the SEC because BNSF has publicly traded debt. 



Date: 03/18/19 12:05
Re: Genesee & Wyoming to go private?
Author: milepost72

I know for a fact that CSX is looking to sell off an enourmous amount of secondary routes outside of their "so-called" "triangle" they prefer to operate. I can see G&W trying to get it's act together so it can grab a chunk of those routes! In some cases short-lines are better for certain routes because they are more willing to do "old-school" railroading, such as, LCL freight, local switching jobs, etc. The class 1's pretty much will not do anything but point A to point B unit trains, manifest freights, and intermodal. Almost all switching jobs in Lexington, KY for example were spun off by both CSX and NS to RJ Corman Railroad Co. Another example is NS spining off the Murphy Branch to WATCO who operates the Blue Ridge Southern out of Canton, NC. One word of advice for whomever buys out G&W please get rid of that awful Orange paint scheme! LOL



Edited 3 time(s). Last edit at 03/18/19 12:11 by milepost72.



Date: 03/18/19 12:38
Re: Genesee & Wyoming to go private?
Author: Lackawanna484

Right now, there's a lot of infrastructure capital fund activity.  One deal announced this morning involves the taking private of a pipeline network.  Severalother pipe, wire, etc deals are being discussed or rumored.

I could see G&W taking a property like the Providence & Worcester, and selling a half interest in that to a fund.  G&W continues to operate it, but gets half the purchase debt off the G&W balance sheet.   P&W recently traded, and there's a clearly established value for it.



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